a2 As a service to its customers, Current Designs repairs damaged kayaks. This is especially valuable to customers that have made asignificant investment in the composite kayaks. To price the repair jobs, Current Designs uses time-and-material pricing with a desiredprofit margin of $22 per labor hour and a 50% materials loading charge.Recently, Bill Johnson, Vice President of Sales and Marketing, received a phone call from a dealer in Brainerd, Minnesota. The dealerhas a customer who recently damaged his composite kayak and would like an estimate of the cost to repair it. After the dealer emailedpictures of the damage, Bill reviewed the pictures with the repair technician and determined that the total materials charges for therepair would be $86. Bill estimates that the job will take 4 labor hours to complete.Following is the budgeted cost data for Current Designs:Repair-technician wages$35,000Fringe benefitsOverhead$12,500$12,500Current Designs has allocated 2,500 hours of repair time for the upcoming year. The customer has agreed to transport the kayak tothe Winona production facility for the repairs.Determine the price that Current Designs would charge to complete the repairs for the customer.Price

Wages: $35,000Fringe benefits: $12,500Overhead: $12,500Total annual labor cost: $35,000 + $12,500 +…

Answered: As a service to its customers, Current…

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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Sylvan Creations designs, manufactures, and sells modern wood sculptures. Sandra Johnson is an artist for the company. Johnson has spent much of the past month working on the design of an intricate abstract piece. Jim Chase, product development manager, likes the design. However, he wants to make sure that the sculpture can be priced competitively. Ellen Cooper, Sylvan’s cost accountant, presents Chase with the following cost data for the expected production of 75 sculptures: Design cost $10,000 Direct materials 80,000 Direct manufacturing labor 27,500 Variable manufacturing overhead 10,000 Fixed manufacturing overhead 42,500 Fixed marketing costs 17,500 Q.Chase believes that competition will require Sylvan to reduce the price of the sculpture to $2,800. Rather than using the highest-grade wood available, Sylvan could use standard grade wood and lower the cost of direct materials by 25%. This redesign will require an additional $1,500 of design cost. Will this design change allow…
Sylvan Creations designs, manufactures, and sells modern wood sculptures. Sandra Johnson is an artist for the company. Johnson has spent much of the past month working on the design of an intricate abstract piece. Jim Chase, product development manager, likes the design. However, he wants to make sure that the sculpture can be priced competitively. Ellen Cooper, Sylvan’s cost accountant, presents Chase with the following cost data for the expected production of 75 sculptures: Design cost $10,000 Direct materials 80,000 Direct manufacturing labor 27,500 Variable manufacturing overhead 10,000 Fixed manufacturing overhead 42,500 Fixed marketing costs 17,500 Q. Chase thinks that Sylvan Creations can successfully market each piece for $3,000. To earn the required return on capital, the company’s target operating income per unit is 20% of target price. Calculate the target full cost per unit of producing the 75 sculptures. Does the cost estimate Cooper developed meet Sylvan’s requirements?…
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