Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Laser Impressions Inc. manufactures color laser printers. Model J20 presently sells for $675 and has a product cost of $540, as follows: Direct materials $390

Laser Impressions Inc. manufactures color laser printers. Model J20 presently sells for $675 and has a product cost of $540, as follows:

Direct materials $390
Direct labor 100
Factory overhead 50
Total $540

It is estimated that the competitive selling price for color laser printers of this type will drop to $640 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

  1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
  2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $14 per unit.
  3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 40% of the factory overhead are related to running injection molding machines.

The direct labor rate is $42 per hour.

a. Determine the target cost for Model J20, assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places. $fill in the blank 1 per unit

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places. $fill in the blank 2 per unit

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

1. Direct labor reduction $fill in the blank 3 per unit
2. Additional inspection $fill in the blank 4 per unit
3. Injection molding productivity improvement $fill in the blank 5 per unit
Total savings $fill in the blank 6 per unit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Auditing and Other Assurance Services

Authors: Ray Whittington, Kurt Pany

19th edition

978-0077804770, 78025613, 77804775, 978-0078025617

More Books

Students also viewed these Accounting questions

Question

U11 Informing Industry: Publicizing Contract Actions 317

Answered: 1 week ago

Question

What data items do you need to be able to find duplicate payments?

Answered: 1 week ago