Total costs $100 Instructions a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's 1. What would be the price charged for the all-body swimsuit? 2. Under what circumstances might Mucky Duck consider manufacturing the all-body swi given this approach? 3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to inc produce the all-body swimsuit? b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would cha retailers for the all-body swimsuit?
Total costs $100 Instructions a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's 1. What would be the price charged for the all-body swimsuit? 2. Under what circumstances might Mucky Duck consider manufacturing the all-body swi given this approach? 3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to inc produce the all-body swimsuit? b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would cha retailers for the all-body swimsuit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
please answer the following question thanks
![Calculate target cost using cost-plus pricing.
E9.18 (LO 1, 2) Mucky Duck makes swimsuits and sells them directly to retailers. Although Mucky
Duck has a variety of suits, it does not make the all-body suit used by highly skilled swimmers. The
market research department believes that a strong market exists for this type of suit. It says the all-
body suit would sell for approximately $110. Given its experience, Mucky Duck believes the all-body
suit would have the following manufacturing costs:
$25
30
Manufacturing overhead 45
Total costs
$100
Direct materials
Direct labour
Instructions
a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's costs.
1. What would be the price charged for the all-body swimsuit?
2. Under what circumstances might Mucky Duck consider manufacturing the all-body swimsuit
given this approach?
3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur to
produce the all-body swimsuit?
b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge
retailers for the all-body swimsuit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F422a3402-f0e9-4c20-b89e-5230245172a8%2F6e324604-c065-4c27-99c3-86aea872f73e%2Fdewvdvu_processed.png&w=3840&q=75)
Transcribed Image Text:Calculate target cost using cost-plus pricing.
E9.18 (LO 1, 2) Mucky Duck makes swimsuits and sells them directly to retailers. Although Mucky
Duck has a variety of suits, it does not make the all-body suit used by highly skilled swimmers. The
market research department believes that a strong market exists for this type of suit. It says the all-
body suit would sell for approximately $110. Given its experience, Mucky Duck believes the all-body
suit would have the following manufacturing costs:
$25
30
Manufacturing overhead 45
Total costs
$100
Direct materials
Direct labour
Instructions
a. Assume that Mucky Duck uses cost-plus pricing, and sets the price 25% above the product's costs.
1. What would be the price charged for the all-body swimsuit?
2. Under what circumstances might Mucky Duck consider manufacturing the all-body swimsuit
given this approach?
3. What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur to
produce the all-body swimsuit?
b. Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge
retailers for the all-body swimsuit?
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