Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product:YearExpected Volume (Units)Expected Price per Unit141,280$19248,00020390,00016434,40012The firm wants to net a minimum of $3.50 per unit in profit over the product’s life, and selling and administrative expenses are expected to average $43,000 per year. Calculate the life cycle target cost per unit to produce the new utensil. Note: Round your answer to two decimal places (i.e., round 2.4555 to 2.46). $

Formula: Fixed cost per unit = Total expected average cost / Number of units Division of total…

Answered: Utah Utensil has developed a new…

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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Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product:

Year	Expected Volume (Units)	Expected Price per Unit
1	41,280	$19
2	48,000	20
3	90,000	16
4	34,400	12

The firm wants to net a minimum of $3.50 per unit in profit over the product’s life, and selling and administrative expenses are expected to average $43,000 per year. Calculate the life cycle target cost per unit to produce the new utensil. Note: Round your answer to two decimal places (i.e., round 2.4555 to 2.46). $

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