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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 $700, and sales volume averages 35,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $678. 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 35,000 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) Materials handling (number of purchases and cost) Machine setups (number and cost) Returns and rework (number of times and cost) Required: Budgeted Quantity Budgeted Cost $ 7,500,000 Actual Quantity Actual Cost $8,000,000 2,660,000 2,900,000 1,320 500,000 2,000 6,500 2,400 500 1,000,000 4,450 1,250,000 2,500 180,000 700 $ 15,990,000 3,125,000 2,620,000 450,000 985,000 1,225,000 230,000 $ 16,635,000 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost

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 $700, and sales volume averages 35,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $678. 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 35,000 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) Materials handling (number of purchases and cost) Machine setups (number and cost) Returns and rework (number of times and cost) Required: Budgeted Quantity Budgeted Cost $ 7,500,000 Actual Quantity Actual Cost $8,000,000 2,660,000 2,900,000 1,320 500,000 2,000 6,500 2,400 500 1,000,000 4,450 1,250,000 2,500 180,000 700 $ 15,990,000 3,125,000 2,620,000 450,000 985,000 1,225,000 230,000 $ 16,635,000 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter12: Activity-based Management
Section: Chapter Questions
Problem 28P: Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas...
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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 $700, and sales volume averages 35,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $678. 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 35,000 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) Materials handling (number of purchases and cost) Machine setups (number and cost) Returns and rework (number of times and cost) Required: Budgeted Quantity Budgeted Cost $ 7,500,000 Actual Quantity Actual Cost $8,000,000 2,660,000 2,900,000 1,320 500,000 2,000 6,500 2,400 500 1,000,000 4,450 1,250,000 2,500 180,000 700 $ 15,990,000 3,125,000 2,620,000 450,000 985,000 1,225,000 230,000 $ 16,635,000 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost
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 $700, and sales volume averages 35,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $678. 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 35,000 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) Materials handling (number of purchases and cost) Machine setups (number and cost) Returns and rework (number of times and cost) Required: Budgeted Quantity Budgeted Cost $ 7,500,000 Actual Quantity Actual Cost $8,000,000 2,660,000 2,900,000 1,320 500,000 2,000 6,500 2,400 500 1,000,000 4,450 1,250,000 2,500 180,000 700 $ 15,990,000 3,125,000 2,620,000 450,000 985,000 1,225,000 230,000 $ 16,635,000 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost
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