Jacob Machine Technology Ltd. makes a tool for sharpening the blades of pruning shears and glass clippers. The company has invested $250000 in developing this sharpener. This tool which is about the size of a piece of chewing gun costs $3 to make. Fixed costs for the sharpener are $10,000. The company expects to sell 100,000 sharpeners this year. Jacob Machine's markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate its markup price, its target‐return price as well as its breakeven volume at both prices. Which price should Jacob Manufacturing use?
Jacob Machine Technology Ltd. makes a tool for sharpening the blades of pruning shears and glass clippers. The company has invested $250000 in developing this sharpener. This tool which is about the size of a piece of chewing gun costs $3 to make. Fixed costs for the sharpener are $10,000. The company expects to sell 100,000 sharpeners this year. Jacob Machine's markup on sales is 30 percent, and it wants to earn a 20 percent ROI. Calculate its markup price, its target‐return price as well as its breakeven volume at both prices. Which price should Jacob Manufacturing use?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Jacob Machine Technology Ltd. makes a tool for sharpening the blades of pruning
shears and glass clippers. The company has invested $250000 in developing this
sharpener. This tool which is about the size of a piece of chewing gun costs $3 to
make. Fixed costs for the sharpener are $10,000. The company expects to sell
100,000 sharpeners this year. Jacob Machine's markup on sales is 30 percent, and it
wants to earn a 20 percent
as its breakeven volume at both prices. Which price should Jacob Manufacturing
use?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education