Exercise 8-4

Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 30,900 units.

Per Unit

Total

Direct materials

$19

Direct labor

$10

Variable manufacturing overhead

$15

Fixed manufacturing overhead

$370,800

Variable selling and administrative expenses

$5

Fixed selling and administrative expenses

$92,700

The company uses a 40% markup percentage on total cost.

Compute the total cost per unit.

Total cost per unit

$

Compute the target selling price.(Round answer to 2 decimal places, e.g. 10.50.)

Target selling price

$

Exercise 8-5

Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 486,000 units.

Per Unit

Total

Direct materials

$6.97

Direct labor

$10.86

Variable manufacturing overhead

$14.80

Fixed manufacturing overhead

$3,013,200

Variable selling and administrative expenses

$14.03

Fixed selling and administrative expenses

$1,516,320

The company has a desired ROI of 24%. It has invested assets of $28,504,000.

Compute the total cost per unit.(Round answer to 2 decimal places, e.g. 10.50.)

Total cost per unit

$

Compute the desired ROI per unit.(Round answer to 2 decimal places, e.g. 10.50.)

Desired ROI per unit

$

Compute the markup percentage using total cost per unit.(Round answer to 2 decimal places, e.g. 10.50.)

Markup percentage using total cost per unit

%

Compute the target selling price.(Round answer to 2 decimal places, e.g. 10.50.)

Target selling price

$

Exercise 8-7

Gibbs Corporation produces industrial robots for high-precision manufacturing. The following information is given for Gibbs Corporation.

Per Unit

Total

Direct materials

$400

Direct labor

$310

Variable manufacturing overhead

$75

Fixed manufacturing overhead

$1,863,900

Variable selling and administrative expenses

$56

Fixed selling and administrative expenses

$493,770

The company has a desired ROI of 24%. It has invested assets of $49,881,125. It anticipates production of 3,270 units per year.

Compute the cost per unit of the fixed manufacturing overhead and the fixed selling and administrative expenses.

Fixed manufacturing overhead

$

per unit

Fixed selling and administrative expenses

$

per unit

Compute the desired ROI per unit.(Round answer to 0 decimal places,e.g. 125.)

ROI

$

per unit

Compute the target selling price.(Round answer to 0 decimal places, e.g. 125.)

Target selling price

$

Exercise 8-14

The Bathtub Division of Kirk Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with gold-plated fixtures for the company's 50-year anniversary. It would make only 4,700 of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $160. If sold externally, the estimated variable cost per unit would be $130. However, by selling internally, the Faucet Division would save $7 per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $42 per unit and has variable costs of $30.

Compute the minimum transfer price that the Faucet Division should be willing to accept.

Minimum transfer price$

Should they accept this offer?

They

should not accept

should accept

this offer.

Exercise 9-10 LowellCornpany makesancl sells artistic framesfor pictures. The controlleris responsible for preparing the master budget and has accurmlated the following iniormationior 2017. January February Harcll Auril May Estirnatedunitsales 10,600 11,400 8,900 8,800 8,300 Sales price perunil: $50.20 $48.l0 $48.80 $48.80 $48.80 Direct labor hours per unit 2.3 2.3 1.2 1.? 1.7 Wage perdirectlaborhour $2.00 $7.00 $7.00 $8.00 $8.00 Lowell has a labor contract that calls for a wage increase to $8.00 per houronApril 1. New labor- savrng machinery has been installedand will be fully operational by March 1. Lowell expects to begnthe year with 15,160 frames on hand and has a policy ofcarrying an end- ofemonth inventory of100% ofthe following month's sales, plus 40% ofthe second following month's sales. Prepare a productiontrudgetfor Lowell Company by month and forthe rst ouarterofthe year. LDWELL CDIVIPANY Production Budget The direct labor budget shodd include direct labor hours. (RmndDr'rect l'obor hours per unit answers to I decimal place, e.g. 52.7.) LDWELL COMPANY Direct Labor Budget