Part 7: Chapter 8 Reading You are given the following questions, but not required to solve them for numbers. Instead, please read them carefully and follow the instructions to complete each requirement. 1) Stoneycreek golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways, Fixed costs are projected to be $20 million for the golfing season. About 000 golfers are expected each year. Variable costs are about $12 per golfer. The Stoneycreek course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Based on these numbers, what is Stoneycreek's target revenue? Requirements: 1) Which pricing approach should Stoneycreek use and why? 2) List ONLY the relevant information to solve the problem; and use a graphic organizer, such as flowcharts and tables to show how to solve the problem. 2) The following information relates to current production of outdoor chaise lounges at Backyard Posh: $106 $565,000 Variable manufacturing costs per unit Total fixed manufacturing costs Variable marketing and administrative costs per unit Total fixed marketing and administrative costs $250,000 The regular selling price per chaise lounge is $290. The company is analyzing the opportunity to accept a special sales order for 1200 chaise lounge at a price of $210 per unit. Fixed costs would remain unchanged. The company has the capacity to produce 55,000 chaise lounges per year, but is currently producing and selling 9000 chaise lounges per year. The 1200 units would not require any variable marketing and administrative expenses. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected? Requirements: 1) List ONLY the relevant information to solve the problem; and use a graphic organizer, such as flow charts and tables, to show how to solve the problem. 3) Lasso Corporation manufactures Part B89 in its internal processing division. Lasso produces 12,000 units of Part B89 annually. The annual costs to produce Part B89 at the level of 12,000 units include: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost $3.50 $8.20 $4.00 $3.20 $18.90 All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assuming Lasso can purchase 12.000 units of the part from the Nadal Parts Company for $20.30 each, and the facilities currently used to make the part could be rented out to another manufacturer for $21.000 a year, what should Lasso do? Requirements: 1) List ONLY the relevant information to solve the problem; and use a graphic organizer, such as flowcharts and tables, to show how to solve the
