Cost Accounting

A company’s sales volume averages 4,000 units per year.
Recently, its main competitor reduced the price of its product to $48.
The company expects sales to drop dramatically unless it matches the competitor's price.

In addition, the current profit per unit must be maintained.
Information about the product (for production of 4,000) is as follows.

Standard Quantity Actual Quantity Actual Cost
Materials (pounds) 5,800 6,000 $60,000
Labor (hours) 1,800 2,000 $20,000
Setups (hours) 0 225 $8,000
Material handling (moves) 0 400 $5,000
Warranties (number repaired) 0 300 $15,000


Required
a. Calculate the target cost for maintaining current market share and profitability.
b. Calculate the non-value-added cost per unit.
c. If non-value-added costs can be reduced to zero, can the target cost be achieved?

  1. 👍 0
  2. 👎 0
  3. 👁 51
asked by David

Respond to this Question

First Name

Your Response

Similar Questions

  1. Finance

    What is the projects initial outlay? Should the project be accepted why or why not? New Caledonia Problem 35% tax bracket 12% discount rate Cost of new plant $9,000,000.00 Shipping and $350,000.00 Sales: Year Sales 1 125,000 units

    asked by cc on August 4, 2012
  2. Managerial Economic

    The ABC Company manufactures AM/FM clock radios and sells on average 3,000 units monthly at 25$ each to retail stores.Its closest competitor produces a similar type of radio that sells for 28$. a. If the demand for ABC's product

    asked by sophea on December 8, 2013
  3. Finance

    Allison Radios manufactures a complete line of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126.

    asked by michael on September 15, 2011
  4. Managerial accounting

    The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 12,000 14,000

    asked by kim on September 5, 2011
  5. Accounting

    For the current year ending March 31, Ewok Company expects fixed costs of $740,000, a unit variable cost of $55, and a unit selling price of $80. a. Compute the anticipated break-even sales (units). units b. Compute the sales

    asked by Anonymous on July 14, 2013
  6. Marketing

    Explain why fixed and variable costs per unit decline as sales volume increases. Suppose a company had a variable cost/unit of $20 at a cumulative volume of 20,000 units. What would be their approximate variable cost per unit when

    asked by Charles on December 9, 2009
  7. Accounting

    Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May. Estimated inventory (units), May 1 20,000 Desired inventory (units), May 31 15,000 Expected sales

    asked by Anonymous on July 14, 2013
  8. Accounting

    Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 30,000 units 18,000 units Desired ending inventory 34,000 units 17,000 units

    asked by Anonymous on July 14, 2013
  9. accounting

    Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 32,000 units 20,000 units Desired ending inventory 34,000 units 17,000 units

    asked by Anonymous on May 1, 2016
  10. finance

    a company's current sales are $400,000 at a volume of 10,000 units. Fixed costs are $120,000 and variable costs are $30 per unit. What is the company's breakeven sales volume in units?

    asked by t.b. on November 25, 2011

More Similar Questions