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. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. Accounting

    If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sales (units) if fixed costs are reduced by $30,000? Answer 30,000 units 8,710 units 12,273 units 20,000 units

  2. Accounting

    CollegePak Company produced and sold 60,000 backpacks during the year just ended at an average price of $20 per unit. Variable manufacturing costs were $8 per unit, and variable marketing costs were $4 per unit sold. Fixed costs

  3. Economics

    When XYZ firm entered the market for good two years back, it kept the price of its product low to attract customers away from its leading competitor. The firm has now established itself and has a market share of 20 percent. The

  4. mathmatics

    XYZ company’s cost function for the next four months is C = 500,000 + 5Q A. Find the BE dollar volume of sales if the selling price is br. 6 / unit B. What would be the company’s cost if it decides to shut down operations for

  1. Mathematics

    XYZ Company plans to market a new product.Based on its market studies,the company estimates that it can sell 5500 units in 2004.The selling price will be birr 2 per unit.Variable costs are estimated to be 40% of the selling

  2. 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

  3. 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

  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

  1. accounting

    Carlton company had assetsof $280,000 & liabilities of $120,000 at the beginning of the year and assets of $400,000 & liabilities of $140,000 at the end of the year. During the year, the owner invested an additional $40,000 in the

  2. financial management

    Data for Barry Computer Company and its industry averages follow: A. Calculate the indicated ratios for Barry. B. Construct and extend DuPont evaluation for both Barry and the industry. C. Outline Barry’s strengths and

  3. 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

  4. mathematics

    2. In its first year, “Abol Buna Co” had the following experience Sales = 25,000 units Selling price = br. 100 TVC = br. 1,500,000 TFC = br. 350,000 Required: 1. Develop Revenue, cost & profit functions for the co. in terms of

You can view more similar questions or ask a new question.