Calculate the revenue per hour

Assignment Help Managerial Accounting

Reference no: EM13173210

Tidbit Corporation uses target costing and will soon enter a very competitive marketplace in which it will have limited influence over the prices that are charged.

Management and consultants are working to fine-tune the company's sole service, which hopefully will generate a 15% return (profit) on the firm's $30,000,000 asset investment.

The following information is available:

Hours of service to be provided	$ 125,000
Anticipated variable cost per service hour	$ 200
Anticipated fixed cost	$ 2,750,000	annually

Required:

A. How much profit must Tidbit produce to achieve a 15% return?

B. Calculate the revenue per hour thatTidbit must generate to achieve a 15% return.

C. Assume that prior to entering the marketplace, management conducted a planning exercise to determine whether a 20% return could be attained in year Two.

Can the company achieve this return if (a) competitive pressures dictate a maximum selling price of $265 per hour and (b) service hours, variable cost per service hour,
and fixed costs are the same as the amounts anticipated in year no. 1? Show calculations.

D. If your answer to part "C" is "no," suggest and briefly describe a procedure that Argosy might use to achieve desired results.

Attachment:- Exam.xls

Reference no: EM13173210

Questions Cloud

How many different types of resonance structures : How many different types of resonance structures can be drawn for the ion SO32.

Contributions to the managerial decision-making process : Incremental analysis is the process of identifying the financial data that do not change under alternative courses of action.change under alternative courses of action.are mixed under alternative courses of action.no correct answer is given.

How much ice was added : A quantity of ice at 0°C is added to 66.4 g of water in a glass at 55°C. After the ice melted, the temperature of the water in the glass was 15°C. How much ice was added? The heat of fusion of water is 6.01 kJ/mol and the specific heat is 4.18 J/(..

Predict the outcome of the following reactions : Predict the outcome of the following reactions represented by the following equations by using the activity series, and balance the equations.

Calculate the revenue per hour : How much profit must Tidbit produce to achieve a 15% return and calculate the revenue per hour that Tidbit must generate to achieve a 15% return.

What will the volume of the ball be as the car : A basketball with a volume of 3.50 Liters is left in a car when the temperature is 298 K. What will the volume of the ball be as the car heats up to 305 K during the day?

Calculate the mass percentage of cobalt in co3(po3)2 : Calculate the mass percentage of cobalt in Co3(PO3)2.

How many grams of ammonia could be produced at maximum yield : if equal masses of N2 and H2 (7.00 grams each) are combined to produce ammonia NH3, how many grams of ammonia could be produced at maximum yield?

Calculate the concentration of nobr : The rate constant for the second- order reaction.starting with a concentration of 0.86m, calculate the concentration of NOBr after 57s.

User Account

All Pages