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Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,840 whereas the competition's comparable workbench sells for $1,620. Sam determined that a price drop to $1,620 would be necessary to protect its market share and maintain an annual sales level of 14,400 workbenches. Cost data based on sales of 14,400 workbenches: Budgeted Quantity 182,000 Direct materials (pounds). Direct labor (hours) Machine setups (number of setups) Mechanical assembly (machine hours) The current cost per unit is (rounded to the nearest whole dollar): 75,600 1,600 32,200 Actual Quantity 175,000 75,000 1,160 284,750 Actual Cost $ 3,457,000 828,500 257,000 3,764,000

Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,840 whereas the competition's comparable workbench sells for $1,620. Sam determined that a price drop to $1,620 would be necessary to protect its market share and maintain an annual sales level of 14,400 workbenches. Cost data based on sales of 14,400 workbenches: Budgeted Quantity 182,000 Direct materials (pounds). Direct labor (hours) Machine setups (number of setups) Mechanical assembly (machine hours) The current cost per unit is (rounded to the nearest whole dollar): 75,600 1,600 32,200 Actual Quantity 175,000 75,000 1,160 284,750 Actual Cost $ 3,457,000 828,500 257,000 3,764,000

FINANCIAL ACCOUNTING
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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Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,840 whereas the competition's comparable workbench sells for $1,620. Sam determined that a price drop to $1,620 would be necessary to protect its market share and maintain an annual sales level of 14,400 workbenches. Cost data based on sales of 14,400 workbenches: Direct materials (pounds) Direct labor (hours) Budgeted Quantity 182,000 75,600 Machine setups (number of setups) Mechanical assembly (machine hours) The current cost per unit is (rounded to the nearest whole dollar): 1,600 32,200 Actual Quantity 175,000 75,000 1,160 284,750 Actual Cost $3,457,000 828,500 257,000 3,764,000
Transcribed Image Text:Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,840 whereas the competition's comparable workbench sells for $1,620. Sam determined that a price drop to $1,620 would be necessary to protect its market share and maintain an annual sales level of 14,400 workbenches. Cost data based on sales of 14,400 workbenches: Direct materials (pounds) Direct labor (hours) Budgeted Quantity 182,000 75,600 Machine setups (number of setups) Mechanical assembly (machine hours) The current cost per unit is (rounded to the nearest whole dollar): 1,600 32,200 Actual Quantity 175,000 75,000 1,160 284,750 Actual Cost $3,457,000 828,500 257,000 3,764,000
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