Most manufacturing companies have gross margin goals, and orioles is no different. Oriole'smakes lightweight backpacks that are suitable for a number of purposes. Management at thecompany has dictated a strict 60% gross margin goal, and to date it has been able to achieveit. some of the company's financial information is as follows: SALES $600,000, VARIABLESELLING EXPENSE $3.50/UNIT, FIXED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE$121,000. IF THE FIXED PORTION OF ORIOLES MANUFACTURING COST IS $100,000,WHAT COMBINATION OF SELLING PRICE AND VARIABLE MANUFACTURING COST WOULDFIT THE CORPORATE GROSS MARGIN PERCENTAGE GOAL ASSUMING SALES VOLUME IS20,000 UNITS?S

Step 1:Gross profit is difference between sales price and cost of goods sold. Cost of goods sold…

Answered: Most manufacturing companies have gross…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 16E

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Most manufacturing companies have gross margin goals, and Murphy's is no different. Murphy's makes lightweight backpacks that are suitable for a number of purposes. Management at the company has dictated a strict 60% gross margin goal, and, to date, it has been able to achieve it. Some of the company's financial information is as follows. Sales $ 625,000 Variable selling expenses $ 2.50/unit Fixed selling, general, and administrative expenses $ 120,000 Questions: a. Given the above information, what is the most Murphy's can incur in manufacturing costs and still meet its gross margin goal? b. If the fixed portion of Murphy's manufacturing cost is $87,500, what combination of selling price and variable manufacturing costs would fit the corporate gross margin percentage goal, assuming sales volume is 25,000 units? c. Assume now that instead of having a corporate margin goal, the company switches to a contribution margin goal. If this new contribution margin goal…
Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,950 cell phones are as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit $69 32 26 20 Fixed costs: Factory overhead Selling and administrative expenses Voice Com desires a profit equal to a 15% return on invested assets of $600,500. $147 > a. Determine the amount of desired profit from the production and sale of 4,950 cell phones. 90,075 $199,200 68,900 b. Determine the product cost per unit for the production of 4,950 cell phones. Round your answer to the nearest whole dollar. -158 X per unit Total Cost c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places. -66 X % Markup Selling price d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar. per unit per unit per unit
Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come up with the following data for the year: contribution margin of $570,000, controllable fixed of $228,000, and noncontrollable fixed costs of $57,000. Required: 1. What is the controllable margin? Controllable Margin 2. What is the total contribution by profit center (CPC)?
Windows is a small company that installs windows. Its cost structure is as follows: LOADING... (Click the icon to view the cost structure.) Traylor Windows' breakeven revenues is $1,870,000 and breakeven units is 3,400. Calculate the margin of safety in units and dollars and the margin of safety percentage if Traylor Windows expects to sell 3,600 windows in the year. Begin with calculating the margin of safety in dollars. Determine the formula to calculate the margin of safety in dollars. Then, enter the amounts and calculate the margin of safety in dollars. Budgeted revenue - Breakeven revenue = Margin of safety in dollars - = Next, determine the formula, enter the amounts, and calculate the margin of safety in units. Budgeted units - Breakeven units = Margin of safety in units - = Finally, calculate the margin of safety percentage if…
Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $28 per unit sold Advertising expense $178,000 per quarter Sales commissions 6% of sales Shipping expense ? Administrative salaries $88,000 per quarter Insurance expense $9,800 per quarter Depreciation expense $58,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Quarter Units Sold ShippingExpense Year 1: First 24,000 $ 168,000 Second 26,000 $ 183,000 Third 31,000 $ 225,000 Fourth 27,000 $ 188,000 Year 2: First 25,000 $ 178,000 Second 28,000 $ 193,000 Third 38,400 $ 240,000 Fourth 35,400 $ 216,000 Required: 1.…
Shock Company manufactures computer monitors. The following is a summary of its basic cost and revenue data: Per Unit Percent Sales price $ 460 100.00 Variable costs 237 51.52 Unit contribution margin $ 223 48.48 Assume that Shock Company is currently selling 590 computer monitors per month and monthly fixed costs are $79,800. What is Shock Company's degree of operating leverage (DOL) at this sales volume (i.e., at 590 units)? (Round your answer to three decimal places.) Multiple Choice 2.813. 2.100. 3.325. 2.695. 2.541.
Milden Company is a distributor who wants to start using a contribution format income statement for planning purposes. The company has analyzed its expenses and developed the following cost formulas: Cost Cost Formula Cost of good sold $31 per unit sold Advertising expense $187,000 per quarter Sales commissions 7% of sales Shipping expense? Administrative salaries $97,000 per quarter Insurance expense $10,700 per quarter Depreciation expense $67,000 per quarter Because shipping expense is a mixed cost, the company needs to estimate the variable shipping expense per unit sold and the fixed shipping expense per quarter using the following data: Shipping Expense Year 1: First 33,000 $177,000 Second 35,000 $ 192,000 Third 40,000 $234,000 Fourth 36,000 $ 197,000 Year 2: First 34,000 $ 187,000 Second 37,000 $ 202,000 Third 48,750 $ 240,000 Fourth 45,750 $ 216,000 Required: 1. Using the high- low method, estimate a cost formula for shipping expense in the form Y = a + bX. 2. In the first…
Staley Co. manufactures computer monitors. The following is a summary of its basic cost and revenue data: Per Unit Percent Sales price $ 490 100.00 Variable costs 317 64.69 Unit contribution margin $ 173 35.31 Assume that Staley Co. is currently selling 610 computer monitors per month and monthly fixed costs are $80,100.What is Staley Co.'s degree of operating leverage (DOL) at this sales volume (i.e., at 610 units)? (Round your answer to three decimal places.) Multiple Choice 4.422. 3.709. 4.934. 4.304. 4.150.
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Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: Cost Cost Formula Cost of good sold $30 per unit sold Advertising expense $186,000 per quarter Sales commissions 8% of sales Shipping expense ? Administrative salaries $96,000 per quarter Insurance expense $10,600 per quarter Depreciation expense $66,000 per quarter Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow: Quarter Units Sold ShippingExpense Year 1: First 32,000 $ 176,000…
Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,480 cell phones are as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit 161 34 24 19 $138 Fixed costs: Factory overhead Selling and administrative expenses Voice Com desires a profit equal to a 14% return on invested assets of $600,700. a. Determine the amount of desired profit from the production and sale of 5,400 cell phones. 84,098 ✔ $201,600 71,600 b. Determine the product cost per unit for the production of 5,480 cell phones. Round your answer to the nearest whole dollar. 156 ✔ per unit c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places. X%
MyPhone, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,080 cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $71 Factory overhead $201,900 Direct labor 37 Selling and administrative expenses 71,300 Factory overhead 26 Selling and administrative expenses 20 Total variable cost per unit $154 MyPhone desires a profit equal to a 16% rate of return on invested assets of $598,400. a. Determine the amount of desired profit from the production and sale of 5,080 cell phones.$ b. Determine the product cost per unit for the production of 5,080 of cell phones. Round your answer to the nearest whole dollar.$ per unit c. Determine the product cost markup percentage for cell phones. Round your answer to two decimal places. % d. Determine the selling price of cell phones. Round your answers to the nearest whole…

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