Rusty Company is consideringdeveloping a new product. Thecompany has gathered the followinginformation on this product: Expectedtotal unit cost $20 Estimated investmentfor new product $700,000 Desired ROI5% Expected number of units to beproduced and sold 1,000 The desiredmarkup percentage is: A) 275%. C) 175%B) 75%. D) 100%

The markup value is the amount which is added to the cost inorder to set the selling price and to…

Answered: Rusty Company is considering developing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Crawford Company's plans for a new product require a target cost per unit of $33.33. It plans to sell 30,000 units at $40 per unit. The average investment, including design and development, is $900,000. Required: 1. Compute the expected margin for Crawford Company. (Round your percentage answer rounded to two decimal places (i.e., 0.1234 should be entered as 12.34).) Expected margin 16.68 2. Compute the expected turnover for Crawford Company. (Round your answer to 2 decimal places.) Expected turnover 1,200,000.00 3. Compute the ROI for Crawford Company. (Round intermediate calculations to 2 decimal places. Enter your percentage answer rounded to two decimal places (i.e., 0.1234 should be entered as 12.34).) 11.12 ROI
International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows: Alpha Beta Gamma Total Selling price per unit $250 $400 $1500 Variable cost per unit $80 $200 $800 Expected unit sales (annual) 12,000 6,000 2,000 20,000 Sales mix 50 percent 40 percent 10 percent 100 percent Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales. Required:a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. b) How many units of each printer must be sold to break even? c) i) Explain what is the margin of safety ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are25,000 units?
Red Grass Company produces high definition television sets. The following information is available for this product: Fixed cost per unit $250 Variable cost per unit $750 Total cost per unit $1,000 Desired ROI per unit $300 Red Grass Company’s markup percentage would be Group of answer choices 60%. 40%. 30%. 120%.
Hanisch Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $32 per unit, management projects sales of 30,000 units. The new product would require an investment of $300,000. The desired return on investment is 16%. The target cost per unit is closest to: (Do not round intermediate calculations.) Question 10 options: $40.00 $30.40 $3.20 $32.00
Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price $ 1,500 Annual demand 86,000 units Life cycle 7 years Target profit 26 % return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 36 percent return on sales. 3. Compute the target cost if Majesty wants a 7 percent return on sales.
Q.1 ChemCo has developed a new product, and has consulted with its marketing department, who have determined that the market share will be 20,000 units, and have recommended that a selling price of $60.00 per unit would be app- ropriate. ChemCo has been able to keep the cost per unit at $50.00. The company has spent a total of $900,000 to design and develop this product. Required: Use the above information to compute as follows: 1. Compute the expected margin for ChemCo 2. Compute the expected turnover 3. Compute the ROI Explain why it is necessary to do the above computations, and show how management can use this information for managing operations
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International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows: Alpha Beta Gamma Total Selling price per unit $250 $400 $1,500 Variable cost per unit $80 $200 $800 Expected unit sales (annual) 12,000 6,000 2,000 20,000 Sales mix 50 percent 40 percent 10 percent 100 percent Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales. Required: a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. b) How many units of each printer must be sold to break even? c) i) Explain what is margin of safety ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000 units? SHOW YOUR WORKING

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