Product Pricing using the Cost Plus Approach Methods; Differential Analysis for Accepting Additional Business Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,500,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows: Fixed costs: $120 Factory overhead Selling and administrative expenses Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit $250,000 150,000 30 50 35 $235 eBook Calculator C. Selling price per unit 3. (Appendix) Assuming that the total cost method is used, determine the following: a. Total cost amount per unit $ b. Markup percentage C. Selling price per unit 4. Appendix) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup percentage c. Selling price per unit 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 could lead management to establish a different short-run price. 6. Assume that as of August 1, 3,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On August 3, Crystal Displays Inc. received an offer from Maple Leaf Visual Inc. for 800 units of flat panel displays at $225 each. Maple Leaf Visual Inc. will market the units in Canada under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Crystal Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity a. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. If an amount is zero, enter "O". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order August 3 Reject Accept Differential Order Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Check My Work more Check My Works remaining Previous Next Emal instructor Save and Submit Assignment for Grading ebook Calculator b. Markup percentage % c. Selling price per unit 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 could lead management to establish a different short-run price 6. Assume that as of August 1, 3,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On August 3, Crystal Displays Inc. received an offer from Maple Leaf Visual Inc. for 800 units of flat panel displays at $225 each. Maple Leaf Visual Inc. will market the units in Canada under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Crystal Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity 2. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. If an amount is zero, enter "o". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order August 3 Reject Accept Differential Order Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs Variable manufacturing costs Profit (loss) b. Based on the differential analysis in part (a), should the proposal be accepted? Check My Work more Check My Work uses remaining Previous Next > Emal instructor Save and Exit Submk Assignment for Grading
