Swifty Corporation manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 1000 units at $145 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $45000.
Income would increase by $3000.
Income would increase by $145000.
Income would decrease by $3000.
Coronado Industries is using the target cost approach on a new product. Information gathered so far reveals:
Expected annual sales 350000 units
Desired profit per unit $0.35
Target cost $168000
What is the target selling price per unit?
a. $0.48
b. $0.35
c. $0.70
d. $0.83
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Ответ:
1. Swifty Corporation
If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $45000.
2. Coronado Industries:
The target selling price per unit is:
d. $0.83
Explanation:
a) Data and Calculations:
Swifty Corporation:
Variable cost per unit = $100
Sales price per unit = $176
Contribution margin per unit = $76 ($176 - $100)
Fixed manufacturing costs = $480,000
Production and sales units = 10,000 units
Revenue from special order = $145,000 ($145 * 1,000)
Variable costs for 1,000 units 100,000 ($100 * 1,000)
Contribution margin $45,000 ($145,000 - $100,000)
Fixed costs for special order $0
Net income = $45,000
Coronado Industries:
Expected annual sales 350,000 units
Desired profit per unit $0.35
Target cost $168,000
Desired profit = $122,500 (350,000 * $0.35)
Total sales revenue = $290,500 ($168,000 + $122,500)
Target selling price per unit = $0.83 ($290,500/350,000)
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