Question
(I need to make sure of all answers + I need the last part please) Williams Inc. produces a single product, a part used in
(I need to make sure of all answers + I need the last part please)
Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 56,000 parts in the coming year. While the demand for Williamss part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industrys current downturn.
Total Costs | |||
Variable manufacturing | $ | 4,668,000 | |
Variable selling and administrative | 843,650 | ||
Facility-level fixed overhead | 2,333,875 | ||
Fixed selling and administrative | 663,495 | ||
Batch-level fixed overhead | 348,000 | ||
Total investment in product line | 22,338,000 | ||
Expected sales (units) | 56,000 | ||
Required:
1. Determine the price for the part using a markup of 37% of full manufacturing cost.
2. Determine the price for the part using a markup of 25% of full life-cycle cost.
3. Determine the price for the part using a desired gross margin percentage to sales of 35%.
4. Determine the price for the part using a desired life-cycle cost margin percentage to sales of 28%.
5. Determine the price for the part using a desired before-tax return on investment of 13%.
6. Determine the total contribution margin and total operating profit for each of the methods in requirements 1 through 5.
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a markup of 37% of full manufacturing cost. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Price $ 179.8094 per unit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a markup of 25% of full life-cycle cost. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Price $ 197.7013 per unit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a desired gross margin percentage to sales of 35%. (Round your intermediate calculations and answer to 4 decimal places.) Price $ 201.9196 per unit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a desired life-cycle cost margin percentage to sales of 28%. (Round your intermediate calculations and answer to 4 decimal places.) Price $ 219.6682 per unit Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Determine the price for the part using a desired before-tax return on investment of 13%. (Round your intermediate calculations and answer to 4 decimal places.) Price $ 214.0061 per unitStep by Step Solution
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