Assuming that the variable cost concept is used determinea

Assignment Help Accounting Basics

Reference no: EM13614981

Plasma Labs Inc. recently began production of a new product,flat panel displays, which required the investment of $3,000,000 inassets. The costs of producing and selling 20,000 units offlat panel displays are estimated as follows:

Variable Costs per unit:

Directmaterials $150

Directlabor 30

Factoryoverhead 50

Selling and Admin. Expenses 20

Total $250

Fixed Costs:

Factoryoverhead $2,000,000

Selling and Admin. Expenses 1,000,000

Plasma Labs Inc. is currently considering establishing a sellingprice for flat panel display. The president of Plasma Labs hasdecided to use the cost plus approach to product pricing and hasindicated that the displays must earn a 16% rate of return oninvested assets.

Instructions:

1. Determine the amount of desired profit from the productionand sald of flat panel displays.

2. Assuming that the total cost concept is used, determine (a)the cost amount per unit, (b) the markup percentage, and (c) theselling price of flat panel displays.

3. Assuming that the product cost concept is used, determine(a) the cost amount per unit, (b) the markup percentage (rounded tonearest two decimal places), and (c) the selling price of flatpanel displays (rounded to the nearest dollar).

4. Assuming that the variable cost concept is used, determine(a) the cost amount per unit, (b) the markup percentage, and (c)the selling price of flat panel display.

5. Comment on any additional considerations that couldinfluence establishing the selling price for flat paneldisplays.

6. Assumethat as of September 1, 2008, 13,000 units of flat panel displayshave been produced and sold during the current year. Analysisof the domestic market indicates that 4,400 additional units areexpected to be sold during the remainder of the year at the normalproduct price determined under the total cost concept. OnSeptember 3, Plasma Labs inc. received an offer from Vision SystemsInc. for 2,600 units of flat panel displays at $225each. Vision Systems Inc. will market the units in Canadaunder its own brand name, and no selling administrative expensesassociated with the sale will be incurred by Plasma LabsInc. The additional business is not expected to affect thedomestic sales of flat panel displays, and the additional unitscould be produced using existing capacity.

Prepare a differential analysis report of the proposed sale to Vision Systems Inc.

Based upon the differential analysis report in part(a), should the proposal be accepted?

Reference no: EM13614981

Questions Cloud

Xyz company reported cash collections from customers of : xyz company reported cash collections from customers of 450000 inits 2004 statement of cash flows. at january 1st 2004

Suppose a wire made from an unknown alloy and having a : suppose a wire made from an unknown alloy and having a temperature of 20.0degc carries a current of 0.517 a. at

The furnace operation is part of the total process for each : nbspatlas steel company produces three grades of steel high goodand regular grade. each of these products grades has

Wat is now the net capacitance in terms of a d and l if l : a large metal sheet of thickness l is placed between and parallel to the plates of the parallel-plate capacitor of the

Assuming that the variable cost concept is used determinea : plasma labs inc. recently began production of a new productflat panel displays which required the investment of 3000000

Suppose a satellite is in a circular orbit 3600 earth radii : suppose a satellite is in a circular orbit 3.600 earth radii above the surface of the earth 4.600 earth radii from the

Investigators developed two new vaccines to immunize mice : investigators developed two new vaccines to immunize mice against lyme disease and tested them under field conditions

What is the minimum speed need to drive through a banked : what is the minimum speed need to drive through a banked turn such a car wont slip down the road. the turn is banked at

Pepare a differential analysis report as ofapril 15 2008 : cleopatra cosmetics company is planning a one-month campaign formay to promote sales of one of its two cosmetics

User Account

All Pages