Overview
- Charleston Affair uses the product cost concept to price its goods. The company plans to release a new product in the upcoming month. Use the information shown below to determine: (A) Product cost per unit (B) Desired profit (C) Markup percentage (D) Markup per unit (E) Normal selling price per unit
Total product cost | $49,000 |
Total selling and administrative expenses | $32,100 |
Total assets | $120,000 |
Estimated units produced and sold | 14,000 |
Desired rate of return on assets | 10% |
2.
Wake Coffee Co. expects for the price of Standard Coffee to be $12 per pound in 2016 and sell 2,000 pounds. The company owns $52,000 in assets, with a required rate of return on the assets of 12%. Determine the total target cost the company should achieve using the target costing method.
3.
West End Co. is considering an investment in a new project. The project would have an initial start-up fee of $260,000. The company will incur $20,000 of additional cash expenses each year due to the project, but will earn income of $42,000. Calculate the cash payback period, rounding answers to two decimal places.
4.
A company expects to generate cash revenues of $20,000 over the next five years. Calculate the present value of the earnings using the table below if there is a 10% interest rate.
Present Value of an Annuity of $1 at Compound Interest
Year 10% 12% 15%
1 0.909 0.893 0.870
2 1.736 1.690 1.626
3 2.487 2.402 2.283
4 3.170 3.037 2.855
5 3.791 3.605 3.353
6 4.355 4.111 3.785
7 4.868 4.564 4.160
8 5.335 4.968 4.487
9 5.759 5.328 4.772
10 6.145 5.650 5.019
5.
During the previous period, Jeff's Bikes incurs the following costs in a manufacturing department: cost of maintaining equipment, $5,750; cost of correcting defective goods from customers, $10,000; cost of rework, $12,000; cost of design engineering, $15,000; and cost of product inspections, $9,000. Prepare a cost of quality report for the company if total sales are $1,070,000. Also, determine if each of the costs would be considered value-added or non-value-added. Round percentages to one decimal place.