Emerson ventures is considering purchasing a new line of

Assignment Help Accounting Basics

Reference no: EM13599343

Emerson Ventures is considering purchasing a new line of hang gliders. The company estimates that variable costs will be $325 per unit and fixed costs will be $330,000 per year.

a.Emerson has a pricing policy that dictates that a product's price must be equal to full cost plus 60 percent. To calculate full cost, Emerson must estimate the number of units it will produce and sell in a year. Emerson estimates at the beginning of the year that they will sell 1,500 gliders and sets their price according to that sales and production volume. What is the price?

b.Right after the beginning of the year, the economy takes a dive and Emerson finds that demand for their gliders has fallen drastically; Emerson revises its sales and production estimates to just 1,000 gliders for the year. According to the company policy, what price must they now set?

c.What is likely to happen to the number of gliders sold if Emerson follows company policy and raises the glider price to that calculated in part b?

d.Why is setting price by marking up cost inherently circular for a manufacturing firm?

Reference no: EM13599343

Questions Cloud

The basic difference between a first-stage cost allocation : which of the following statements is are false regarding first-stage and second-stage cost allocation methods?a the

Steve pratt who is single purchased a home in spokane : steve pratt who is single purchased a home in spokane washington for 347500. he moved into the home on february 1 of

If a single cost driver is used as the allocation base : which of the following statements is are true regarding the potential effects of using reported product costs for

On january 1 of year 1 arthur and aretha franklin purchased : on january 1 of year 1 arthur and aretha franklin purchased a home for 1.40 million by paying 230000 down and borrowing

Emerson ventures is considering purchasing a new line of : emerson ventures is considering purchasing a new line of hang gliders. the company estimates that variable costs will

The preferred stock was issued for land having a fair value : jude corporation has been authorized to issue 20000 shares of 100 par value 10 noncumulative preferred stock and

Austin company uses a job order cost accounting system the : austin company uses a job order cost accounting system. the companys executives estimated that direct labor would be

Construction company headquarted in terre haute indiana : construction company headquarted in terre haute indiana built a rest easy motel 35 miles east of terre haute. the

Sue the corporate controller has thus far been impressed : based on the information below please help me answer the following questions 1. provide at least 3 possible non-value

User Account

All Pages