Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Category Unit level. Batch level Product level Facility level Total Model ZM $ 20.70 29.40 Model DS $7.00 9.00 Cost Driver Number of units Estimated Cost $ 25,960 49,920 90,000 Number of TV commercials 180,000 Number of machine hours Number of setups $ 345,880 Amount of Cost Driver ZM: 2,500 units; DS: 9,300 units ZM: 26 setups; DS: 26 setups ZM: 14; DS: 11 ZM: 300 hours; DS: 600 hours Jordan's facility has the capacity to operate 2,700 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the market prices, what was its profit or loss for the previous month? c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34. Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?
Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Category Unit level. Batch level Product level Facility level Total Model ZM $ 20.70 29.40 Model DS $7.00 9.00 Cost Driver Number of units Estimated Cost $ 25,960 49,920 90,000 Number of TV commercials 180,000 Number of machine hours Number of setups $ 345,880 Amount of Cost Driver ZM: 2,500 units; DS: 9,300 units ZM: 26 setups; DS: 26 setups ZM: 14; DS: 11 ZM: 300 hours; DS: 600 hours Jordan's facility has the capacity to operate 2,700 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the market prices, what was its profit or loss for the previous month? c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34. Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
answer in text form please (without image)
Transcribed Image Text:Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan
uses an activity-based costing system. The following are the relevant cost data for the previous month:
Direct Cost per Unit
Direct materials
Direct labor
Category
Unit level
Batch level
Product level
Facility level
Total
Estimated
Cost
$ 25,960
49,920
90,000
180,000
$ 345,880
Model ZM
$ 20.70
29.40
Cost Driver
Model DS
$7.00
9.00
Number of units
Number of setups
Number of TV commercials
Number of machine hours
Amount of Cost Driver
ZM: 2,500 units; DS: 9,300 units
ZM: 26 setups; DS: 26 setups
ZM: 14; DS: 11
ZM: 300 hours; DS: 600 hours
Jordan's facility has the capacity to operate 2,700 machine hours per month.
Required
a. Compute the cost per unit for each product.
b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the
market prices, what was its profit or loss for the previous month?
c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34.
Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the
target cost for each product?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
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