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Thatcher Paints makes and sels paint to home improvement stores. Thatcher's only plant can produce up to 14 million cars of paint per year. Current
Thatcher Paints makes and sels paint to home improvement stores. Thatcher's only plant can produce up to 14 million cars of paint per year. Current annual production is 11 million cans. Fixed manufacturing, selling, and administrative costs total $18.7 million per year. The variable cost of making and seling each can of paint is $5.90. Stockholders expect a 20% annual return on the company's $35 million of assels. Requirement 1. What is Thatcher's current total cost of making and seiling 11 millon cans of paint? What is the current cost per can of paint? Select the formula labels and enter the amounts to calculate Thatcher's current total cost and current cost per can of paint. (Enter currency amounts in dollars, not in milions. Enter unit values as whole numbers, not in millions. Round all currency amounts to the nearest whole dollar and round the cost per unit to the nearest cant, SX.XX.) Plus: Divided by: Total cost per unit Requirements 1. What Is Thatcher's current total cost of making and selling 11 milion cans of paint? What is the current cost per can of paint? 2. Assume that Thatcher is a price-laker and the current wholesale market price 18 $7.90 per can of paint. What is the target total of cost in producing and seling 11 milion cans of paint? Given Thatcher's current total costs, will the company reach stockholders' profit goals? 3. Continuing with Requirement 2, let's say that Thatcher has found ways to reduce its total fixed costs by $240,000. What is the target vertable cost per can of paint? 4. Suppose Thatcher plans to spend an additional $1.6 million on advertising la differentiate its product in order to increase sales volume to 11.5 million cans and become more of a price-setter. Assume that Thatcher did reduce its total fixed costs by $240,000 as stated in Requirement 3 but could not find ways to save on its variable costs. What is the cost-plus price for a can of paint under these conditions
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