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14-23 Cost-plus, target pricing, working backward. TinRoof, Inc., manufactures and sells a do-it-your- self storage shed kit. In 2019, it reported the following: Units produced and sold Investment 3,200 $2,400,000 Markup percentage on full cost 8% 12% 500 Rate of return on investment Variablé cost per unit 1. What was TinRoof's operating income in 2019? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers be- lieve that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. 3. Refer back to the original data. In 2020, TinRoof believes that it will only be able to sell 2,900 units at the price calculated in requirement 1. Management has identified $125,000 in fixed cost that can be elimi- nated. If Tin Roof wants to maintain an 8% markup on full cost, what is the target variable cost per unit?

14-23 Cost-plus, target pricing, working backward. TinRoof, Inc., manufactures and sells a do-it-your- self storage shed kit. In 2019, it reported the following: Units produced and sold Investment 3,200 $2,400,000 Markup percentage on full cost 8% 12% 500 Rate of return on investment Variablé cost per unit 1. What was TinRoof's operating income in 2019? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers be- lieve that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. 3. Refer back to the original data. In 2020, TinRoof believes that it will only be able to sell 2,900 units at the price calculated in requirement 1. Management has identified $125,000 in fixed cost that can be elimi- nated. If Tin Roof wants to maintain an 8% markup on full cost, what is the target variable cost per unit?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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14-23 Cost-plus, target pricing, working backward. TinRoof, Inc., manufactures and sells a do-it-your- self storage shed kit. In 2019, it reported the following: Units produced and sold Investment 3,200 $2,400,000 Markup percentage on full cost 8% 12% 500 Rate of return on investment Variablé cost per unit 1. What was TinRoof's operating income in 2019? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers be- lieve that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. 3. Refer back to the original data. In 2020, TinRoof believes that it will only be able to sell 2,900 units at the price calculated in requirement 1. Management has identified $125,000 in fixed cost that can be elimi- nated. If Tin Roof wants to maintain an 8% markup on full cost, what is the target variable cost per unit?
Transcribed Image Text:14-23 Cost-plus, target pricing, working backward. TinRoof, Inc., manufactures and sells a do-it-your- self storage shed kit. In 2019, it reported the following: Units produced and sold Investment 3,200 $2,400,000 Markup percentage on full cost 8% 12% 500 Rate of return on investment Variablé cost per unit 1. What was TinRoof's operating income in 2019? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? 2. TinRoof is considering increasing the annual spending on advertising by $175,000. The managers be- lieve that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. 3. Refer back to the original data. In 2020, TinRoof believes that it will only be able to sell 2,900 units at the price calculated in requirement 1. Management has identified $125,000 in fixed cost that can be elimi- nated. If Tin Roof wants to maintain an 8% markup on full cost, what is the target variable cost per unit?
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