Paperbacks R Us is an innovative paperback book printer. It provides a range of 'disposable' paperbacks which are ideal for reading in the bath, bed or other relaxed location without the worries about damaging a more expensive book or electronic book. This is a competitive market where just a slight amount of over pricing results in titles not achieving a breakeven level of production, hence the interest of the CEO in applying target costing to help in dealing with the latest book 'Back to the Past'. - The Marketing Director estimates that the book should sell for £5.00 per copy. The Financial Controller requires a margin of 10% on the Selling Price.e The company has estimated the following costs related to producing the latest book: Pages in each book: 250 pages e Size of the print run: 10,000 books e Direct Labour: 5 minutes per book – this is for binding/handling e Direct Labour: £30 per hour – this is for binding/handling e Paper costs: £5 per 1000 pages e Binding materials: £20 per 1000 books Printing inks: £35 per 100 books e All overheads: £12 per Direct Labour hour Required: |Estimate the cost of producing a single copy of 'Back to the Past' in the first print run of 10,000 books using the figures given above and calculate any resulting cost gap in comparison with the target cost. e
Paperbacks R Us is an innovative paperback book printer. It provides a range of 'disposable' paperbacks which are ideal for reading in the bath, bed or other relaxed location without the worries about damaging a more expensive book or electronic book. This is a competitive market where just a slight amount of over pricing results in titles not achieving a breakeven level of production, hence the interest of the CEO in applying target costing to help in dealing with the latest book 'Back to the Past'. - The Marketing Director estimates that the book should sell for £5.00 per copy. The Financial Controller requires a margin of 10% on the Selling Price.e The company has estimated the following costs related to producing the latest book: Pages in each book: 250 pages e Size of the print run: 10,000 books e Direct Labour: 5 minutes per book – this is for binding/handling e Direct Labour: £30 per hour – this is for binding/handling e Paper costs: £5 per 1000 pages e Binding materials: £20 per 1000 books Printing inks: £35 per 100 books e All overheads: £12 per Direct Labour hour Required: |Estimate the cost of producing a single copy of 'Back to the Past' in the first print run of 10,000 books using the figures given above and calculate any resulting cost gap in comparison with the target cost. e
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 2 e
Paperbacks R Us is an innovative paperback book printer. It provides a range of
'disposable' paperbacks which are ideal for reading in the bath, bed or other relaxed
location without the worries about damaging a more expensive book or electronic book.
This is a competitive market where just a slight amount of over pricing results in titles
not achieving a breakeven level of production, hence the interest of the CEO in
applying target costing to help in dealing with the latest book 'Back to the Past'.
The Marketing Director estimates that the book should sell for £5.00 per copy. The
Financial Controller requires a margin of 10% on the Selling Price. e
The company has estimated the following costs related to producing the latest book:
Pages in each book: 250 pages e
Size of the print run: 10,000 books e
Direct Labour: 5 minutes per book - this is for binding/handling e
Direct Labour: £30 per hour - this is for binding/handling
Paper costs: £5 per 1000 pages e
Binding materials: £20 per 1000 books e
Printing inks: £35 per 100 books e
All overheads: £12 per Direct Labour hour e
Required: e
Estimate the cost of producing a single copy of 'Back to the Past' in the first print run
of 10,000 books using the figures given above and calculate any resulting cost gap in
comparison with the target cost. e
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