Please answer number 4 Required:1. Calculate the current cost and profit per unit.2. How much of the current cost per unit is attributable to non-value-addedactivities?3. Calculate the new target cost per unit for a sales price of P800 if the profitper unit is maintained.4. What strategy do you suggest for Benchmark to attain the target costcalculated in requirement 3? Problem 4 (Target Costing, Strategy)Benchmark Industries manufactures large workbenches for industrial use.Wally Garcia, the vice president for marketing at Benchmark, has concludedfrom his market analysis that sales are dwindling for Benchmark's standardtable because of aggressive pricing by competitors. Benchmark's table sellsfor P875 whereas the competition's comparable table is selling in the P800range. Garcia has determined that dropping price to P800 is necessary to regainthe firm's annual market share of 10,000 tables. Cost data based on sales of10,000 tables are:Budgeted Amount400,000 sq. ft.85,000 hrs.30,000 hrs320,000 hrs.Actual Amount Actual Cost425,000 sq. ft.100,000 hrs.30,000 hrs.320,000 hrs.P2,700,0001,000,000300,0004,000,000Direct materialsDirect laborMachine setupsMechanical assembly

Target Costing is a method in which a company determines the selling price and the profit margin in…

1. Calculate the current cost and profit per unit. 2. How much of the current cost per unit is attributable to non-value-added activities? 3. Calculate the new target cost per unit for a sales price of P800 if the profit per unit is maintained. 4. What strategy do you suggest for Benchmark to attain the target cost calculated in requirement 3?

1. Calculate the current cost and profit per unit. 2. How much of the current cost per unit is attributable to non-value-added activities? 3. Calculate the new target cost per unit for a sales price of P800 if the profit per unit is maintained. 4. What strategy do you suggest for Benchmark to attain the target cost calculated in requirement 3?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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