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Ive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Hond rds. The part sells for $692, and sales volume averages 33,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $641. The market is very competitive, and Maxil ant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the m materials labor ct labor ction (hours and cost) als handling (number of purchases and cost) ne setups (number and cost) s and rework (number of times and cost) Budgeted Budgeted Actual Actual Quantity Cost Quantity Cost S 1,240 5,900 2,200 460 7,300,000 2,720,000 2,820,000 460,000 900,000 1,150,000 160,000 15510.000 1,800 4,250 2,300 660 $ 7,800,000 3,025,000 2,680,000 430,000 885,000 1,125,000 210,000 S 16 155.000

Ive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Hond rds. The part sells for $692, and sales volume averages 33,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $641. The market is very competitive, and Maxil ant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the m materials labor ct labor ction (hours and cost) als handling (number of purchases and cost) ne setups (number and cost) s and rework (number of times and cost) Budgeted Budgeted Actual Actual Quantity Cost Quantity Cost S 1,240 5,900 2,200 460 7,300,000 2,720,000 2,820,000 460,000 900,000 1,150,000 160,000 15510.000 1,800 4,250 2,300 660 $ 7,800,000 3,025,000 2,680,000 430,000 885,000 1,125,000 210,000 S 16 155.000

FINANCIAL ACCOUNTING
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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MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $692, and sales volume averages 33,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to S641. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 33,000 units: Budgeted Budgeted Actual Actual Quantity Cost Quantity Cost LITH 1,240 Materials handling (number of purchases and cost) 5,900 2.200 460 Direct materials Direct labor Indirect labor Inspection (hours and cost) Machine setups (number and cost) Returns and rework (number of times and cost) S 7,300,000 2,720,000 2,820,000 460,000 900,000 1,150,000 160,000 15.510,000 1,800 4,250 2,300 660 S 7,800,000 3,025,000 2,680,000 430,000 885,000 1,125,000 210,000 $ 16,155,000. Required: 1. Calculate the target cost for maintaining current market share and profitability. (Do not round Intermediate calculations. Round your answer to 2 decimal places.)
Transcribed Image Text:MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $692, and sales volume averages 33,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to S641. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 33,000 units: Budgeted Budgeted Actual Actual Quantity Cost Quantity Cost LITH 1,240 Materials handling (number of purchases and cost) 5,900 2.200 460 Direct materials Direct labor Indirect labor Inspection (hours and cost) Machine setups (number and cost) Returns and rework (number of times and cost) S 7,300,000 2,720,000 2,820,000 460,000 900,000 1,150,000 160,000 15.510,000 1,800 4,250 2,300 660 S 7,800,000 3,025,000 2,680,000 430,000 885,000 1,125,000 210,000 $ 16,155,000. Required: 1. Calculate the target cost for maintaining current market share and profitability. (Do not round Intermediate calculations. Round your answer to 2 decimal places.)
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