Rahul Sandra owns a small manufacturing company, Tamarisk Camping Stuff Co. The company has been working toperfect a lightweight plastic material to be used for a variety of camping products. Sandra plans to enter themarketplace with a durable, lightweight folding table. Similar tables regularly sell for $39-$44 for a 6-foot table,so Sandra realizes that she'll have to stay within that range. She believes her table could sell on the higher end ofthis range, however, so she is using a target selling price of $44 for planning purposes.Sandra needs to generate an ROI of at least 20% on her invested assets to make this worthwhile in the long term.Her invested assets are $800,000, and she expects to sell 5,000 tables in her first year of activity.(a)Calculate the target cost for one table.Target cost for one tableeTextbook and MediaSave for Later$

Target costing is a pricing strategy where a company determines the desired selling price of a…

Answered: Sandra owns a small manufacturing…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Karens Quilts is considering the purchase of a new Long-arm Quilt Machine that will cost $17,500 and...

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Juan Fox’ has started her own company, Foxy Jeans, which manufactures imprinted jeans. Since he just begun this operation, he rents the equipment from a local printing shop when necessary. The cost of using the equipment is P3,000. The materials used in one jean cost P200, and he can sell it at 350. Requirements: Provide for a mathematical model that will show how to maximize the profit. IF Juan sells 100 jeans, what will his total revenues, total costs, and profit? How many jeans must Juan sell to have zero profit and zero loss (break-even)?
Mark owns a company that sells sneakers of high quality. For each sneaker, the leather cost is SR 110 and the production cost is SR 70. The monthly cost for running the company is SR 32000 and the monthly cost for running the factory is SR 56000. If Mark predicted that he would only sell 550 sneakers, what selling price would make Mark break-even by selling this number of sneakers?
Crepe Creations (CC) is considering franchising its unique brand of crepes to stall- holders on Hermoza Beach, which is four miles long. CC estimates that, on an average day, there are 1,000 sunbathers evenly spread along the beach and each sunbather will buy one crepe per day provided that the price plus any disutility cost does not exceed $5. Each sunbather incurs a disutility cost of getting up from resting to get a crepe and returning to their beach spot of 25 cents for every 1⁄4 mile the sunbather has to walk to get to the CC stall. Each crepe costs $0.50 to make and CC incurs a $40 overhead cost per day to operate a stall. What price should CC charge if it only has one store? What profit would CC gain if it only has one store? How many franchises should CC award given that it determines the prices the stall holders can charge and that it will have a profit-sharing royalty scheme with the stall holders? What is price of a crepe at each stall?
Kathleen Taylor is a high school student who has been investigating the possibility of mowing lawns for a summer job. She has a couple of friends she thinks she could hire on an hourly basis per job. The equipment, including two new lawnmowers and weedeaters, would cost her $500, and she estimates her cost per lawn, based on the time required to pay her friends to mow an average residential lawn (and not including her own labor) and gas for driving to the jobs and mowing, would be about $14. a. If she charges customers $30 per lawn, how many lawns would she need to mow to breakeven? b. Kathleen has 8 weeks available to mow lawns before school starts again, and she estimates that she can get enough customers to mow at least three lawns per day, 6 days per week. How much money can she expect to make over the summer? c. Kathleen believes she can get more business if she lowers her price per lawn. If she lowers her price to $25 per lawn and increases her number of jobs to four per day…
One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit. Natalie comes to you for advice. She asks the following questions. “Curtis has given me a set of his most recent financial statements. What calculations should I do with the data from these statements, and what questions should I ask him after I have analyzed the statements? How will this information help me decide if I should extend credit to Curtis?” “Is there an alternative other than extending credit to Curtis for 30 days?” “I am thinking seriously about being able to have my customers use credit cards. What are some of the advantages and disadvantages of letting my…
One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit. Natalie comes to you for advice. She asks the following questions. “Is there an alternative other than extending credit to Curtis for 30 days?”
Ingrid is planning to expand her business by taking on a new product that costs $7.56. In order to market this new product, $1307.00 must be spent on advertising. The suggested retail price for the product is $11.31. (a) If a price of $14.49 is chosen, how many units does she need to sell to break even? (b) If advertising is increased to $1674.00, and the price is kept at $11.31, how many units does she need to sell to break even?
Having recently graduated with a visual arts degree, Zane is considering starting a new business in this field, selling exotic artwork. He believes he can sell each piece of artwork for an average price of $600. The suppliers of the artwork will be paid a commission of 25% of the price. Artwork will be packed and delivered to the customer. Zane estimates that packing and delivery costs should be about $30 per product. There will be additional expenses associated with running the store. Rent will be $5,400 per month. Utilities (which it is assumed will not vary from month to month) will be $990 per month. Insurance and other expenses will be $750 per month. He plans to pay himself and one sales assistant salaries of $10,500 per month ($7,500 for himself and $3,000 for his assistant). The tax rate is assumed by Zane to be 30%. Required: a. Based on the information how many pieces of artwork per month would Zane need to sell to break even? Show all workings. b. If Zane wanted to earn a…
Grace Kelly is a high school student who has been investigating the possibility of mowing lawns for a summer job. She has a couple of friends she thinks she could hire on an hourly basis per job. The equipment, including two new lawnmowers and weed-eaters, would cost her €500, and she estimates her cost per lawn, based on the time required to pay her friends to mow an average residential lawn (and not including her own labour) and gas for driving to the jobs and mowing, would be about €14. a) If she charges customers €30 per lawn, how many lawns would she need to mow to break even? Represent this graphically b) Grace has 8 weeks available to mow lawns before school starts again, and she estimates that she can get enough customers to mow at least 3 lawns per day, 6 days per week. How much money can she expect to make over the summer? c) Grace believes she can get more business if she lowers her price per lawn. If she lowers her price to €25 per lawn and increases her number of jobs to 4…
Sky is the owner of a small business called Sky's Skateboards. Sky, who grew up in a circle of avid boarders, started the business last year, initially adding cool designs to her siblings' and friends' skateboards. After a year of painting skateboards, Sky realized that her add-on design business was slowing down, but there was unmet local demand for custom designed skateboards. Many people had seen her designs and shown up at her doorstep looking for new skateboards for themselves, their kids, or their significant other. Over the holiday season, Sky had done some research and found she could order quality skateboards in basic colours (black, white, blue, etc) for $50 each. She expects to sell boards for $100 each after designing them. If a customer wants to request a specific design, she will charge a premium and sell the skateboard for $125. For the past year, Sky has customized used skateboards for $30 each (the average job took $5 in materials and an hour of her time).…
Sky is the owner of a small business called Sky’s Skateboards. Sky, who grew up in a circle of avid boarders, started the business last year, initially adding cool designs to her siblings’ and friends’ skateboards. After a year of painting skateboards, Sky realized that her add-on design business was slowing down, but there was unmet local demand for custom designed skateboards. Many people had seen her designs and shown up at her doorstep looking for new skateboards for themselves, their kids, or their significant other. Over the holiday season, Sky had done some research and found she could order quality skateboards in basic colours (black, white, blue, etc) for $50 each. She expects to sell boards for $100 each after designing them. If a customer wants to request a specific design, she will charge a premium and sell the skateboard for $125.For the past year, Sky has customized used skateboards for $30 each (the average job took $5 in materials and an hour of her time). Initially,…
One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit. Natalie comes to you for advice. She asks you to address the questions below. Curtis has given me a set of his most recent financial statements. What calculations should I do with the data from these statements, and what questions should I ask him after I have analyzed the statements? How will this information help me decide if I should extend credit to Curtis? Is there an alternative other than extending credit to Curtis for 30 days? I am thinking seriously about being able to have my customers use credit cards. What are some of the advantages and disadvantages of letting my…

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