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Longman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.2 hour per glass, at a cost of $11 per hour. The actual
Longman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.2 hour per glass, at a cost of $11 per hour. The actual results for one month's production of 6,800 glasses were 0.3 hours per glass, at a cost of $13 per hour. Calculate the direct labor cost variance and the direct labor efficiency variance Select the formula, then enter the amounts and compute the cost variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U). (2) ) x (3) = Direct Labor Cost Variance Select the formula, then enter the amounts and compute the efficiency variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U). (5) - (6) 1) X (7) = Direct Labor Efficiency Variance Standard Quantity Standard Quantity Standard Quantity (4) O (1) O Actual Cost Actual Quantity O Standard Cost (2) O Actual Cost Actual Quantity O Standard Cost (3) O Actual Cost Actual Quantity O Standard Cost o Standard Quantity Standard Quantity Standard Quantity (8) O (5) O Actual Cost Actual Quantity O Standard Cost (6) O O Actual Cost Actual Quantity O Standard Cost (7) O O Actual Cost Actual Quantity O Standard Cost ooo 2. Forever Snow operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 15% return on investment on the company's $135,000,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Forever Snow projects fixed costs to be $36,000,000 for the ski season. The resort serves about 750,000 skiers and snowboarders each season. Variable costs are about $12 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices. Read the requirements? Requirement 1. Would Forever Snow emphasize target pricing or cost-plus pricing? Why? Forever Snow should emphasize a (1). approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have (2). control over pricing. Of course, they still need to consider whether the (3) price is within the range customers are willing to pay Requirement 2. If other resorts in the area charge 586 per day, what price should Forever Snow charge? Complete the following table to calculate the price Forever Snow should charge per lift ticket. Plus: (5) Plus: (7) (8) Divided by: Price per lift ticket (9) Given Forever Snow's favorable reputation, they (10) - 1: Requirements 1. Would Forever Snow emphasize target pricing or cost-plus pricing? Why? 2. If other resorts in the area charge $86 per day, what price should Forever Snow charge? 3. Forever Snow operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. (Click the icon to view the information.) Read the requirements Requirement 1. If Forever Snow cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Complete the following table to calculate Forever Snow's projected income. Revenue at market price Less: Total costs Operating income (Round the percentage to the nearest hundredth percent, X.XX%.) Forever Snow's projected operating income (profit) as a percent of assets amounts to Will investors be happy with this profit level? (1) - Requirement 2. Assume Forever Snow has found ways to cut its fixed costs to $36,000,000. What is its new target variable cost per skier/snowboarder? Complete the following table to calculate Forever Snow's new target variable cost per customer. (Round your final answer to the nearest cent.) Revenue at market price Less: Desired profit Target full cost Less: Reduced level of fixed costs Target total variable costs Divided by number of skiers / snowboarders Target variable cost per skier / snowboarder
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