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2/13/2016 Chapter 5 - GRADED - Assignment Managerial Accounting - MBA 520 Spring 1 2016: MBA 520-81 Spring 1 2016 Ch apter 5 - GR ADED - As s ign men t 2. Ashley Butterfield in s tr u ction s | h elp value: 33.33 poin ts Problem 5-19A Target pricing and target costing with ABC LO 5-3 Kerston Cameras, Inc., manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Kerston uses an activity-based costing system. The following are the relevant cost data for the previous month. Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Model ZM $25 30 Estimated Cost $ 27,000 50,000 90,000 300,000 Model DS $15 14 Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours ZM: ZM: ZM: ZM: Use of Cost Driver 2,400 units; DS: 9,600 units 25 setups; DS: 25 setups 15; DS: 10 500 hours; DS: 1,000 hours $467,000 Kerston's facility has the capacity to operate 4,500 machine hours per month. Required: a. Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Type of Product Direct Materials + Direct Labor + Allocated Overhead = Model ZM + + = Model DS + + Total = b. The current market price for products comparable to Model ZM is $142 and for DS is $54. If Kerston sold all of its products at the market prices, what was its profit or loss for the previous month? (Round intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) http://ezto.mheducation.com/hm.tpx 1/2 2/13/2016 Chapter 5 - GRADED - Assignment Amount Model ZM Model DS c. A market expert believes that Kerston can sell as many cameras as it can produce by pricing Model ZM at $140 and Model DS at $52. Kerston would like to use those estimates as its target prices and have a profit margin of 20 percent of target prices. What is the target cost for each product?(Round your answers to 2 decimal places.) Model ZM Model DS Target cost / unit rev: 04_20_2015_QC_CS-13478 References Worksheet Difficulty: 3 Hard Problem 5-19A Target pricing and target costing with ABC LO 5-3 Learning Objective: 05-03 Use activity-based costing to calculate costs of products and services. 2 016 M c G r aw - H i l l E d u c at i o n . A l l r i g h t s r e s e r v e d . http://ezto.mheducation.com/hm.tpx 2/2