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?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter13: Emerging Topics In Managerial Accounting
Section: Chapter Questions
Problem 32BEB: During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine...
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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.
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