Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Night Glow Inc. recently began production of a new product,
please help
Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business Night Glow Inc. recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of produceng and selling 10,000 halogen lights are estimated as follows: Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 10% return on invested assets. Requiredt Note: Round all markup percentages to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar. 1. Determine the amount of desired profit from the production and sale of the halogen light. 2. Assuming that the product cost method is used, determine the following: a. Product cost amount per unit b. Markup percentaget c. Selling price per unit 3. (Appendix) Assuming that the total cost method is used, determine the following: 4. (Appendix) Assuming that the variable cost method is used, determine the following: 5. The cost-plus approach price computed above should be viewed as a general guideline for establishing long-run normal prices; however, other considerations, such as the price of competing products and general economic conditiens of the marketplace , could lead management to estoblish a different short-run price. rewbeck 6. Assume that as of September 1,7,000 units of halogen light have been produced and sold during the current year. Analysis of the domestic maiket indicates that 3,000 additional units of the halogen light are expected to be sold during the remainder of the year at the norma! product price determined under the product cest method. On September 5, Night Glow Inc. recelved an offer from Tokyo tighting Inc. for 1,600 units of the halogen light at $57 each. Tokyo Lighting Inc. will market the units in Japan under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Night Glow Inc. The additional business is not expected to affect the domestic sales of the halogen light, and the additional un is could be produced using existing productive, selling, and administrative copacity. a. Prepare a differential analysis of the proposed sale to Tokyo Lighting inc, If an amount is zero, enter " 0 ". Differential Analysis 6. Assume that as of September 1, 7,000 units of halogen light have been produced and sold during the current year. Analyis of the doerieszic market indicates that 3,000 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the product cost units in Japan under its own brand name, and no variable selling and administrative expenses associated with the sele will be incurred by Night Glow finc. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing productive, seling, and administrative capacity. a. Prepare a differential analysis of the proposed sale to Tokyo Lighting Inc. If an amount is zero, enter "0". TChesk Wr Wore 6. a. Subtract the additional variable manufacturing costs from the additional revenues. Determine the differential effect on income of the revenuns, costs, and income (loss). b. Based on the differential analysis in part (a), should the proposal be accepted Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started