Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Williams Incorporated produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold

image text in transcribed
Williams Incorporated produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that Information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 50,000 parts in the coming year . While the demand for Williams's part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industry's current downturn Total Costs Variable manufacturing $ 4,680,000 Variable selling and administrative 855,650 Facility-level fixed overhead 2,345,875 Fixed selling and administrative 675,495 Batch-level fixed overhead 360,000 Total Investment in product line 22,350,000 Expected sales (units) 50,000 Required: 1. Determine the price for the part using a markup of 45% of full manufacturing cost 2. Determine the price for the part using a markup of 25% of full life-cycle cost 3. Determine the price for the part using a desired gross margin percentage to sales of 40% 4. Determine the price for the part using a desired life cycle cost margin percentage to sales of 25%. 5. Determine the price for the part using a desired before tax return on investment of 15% 6. Determine the total contribution margin and total operating profit for each of the methods in requirements through 5 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required Required 4 Required Required 6

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Detecting Accounting Fraud Analysis And Ethics

Authors: Cecil W. Jackson

1st Edition

1292059400, 9781292059402

More Books

Students also viewed these Accounting questions