Target cost for the new price

Assignment Help Accounting Basics
Reference no: EM13149352

Steven Corporation manufactures fishing poles that have a price of $21.00. It has costs of $16.32. A competitor is introducing a new fishing pole that will sell for $18.00. Management believes it must lower the price to $18.00 to compete in the highly cost-conscious fishing pole market. Marketing believes that the new price will maintain the current sales level. Steven Corporation's sales are currently 200,000 poles per year.

a) What is the target cost for the new price if target operating income is 20% of sales.

b) What is the change in operating income for the year if $18.00 is the new price and costs remain the same?

c) What is the target cost per unit if the selling price is reduced to $18.00 and the company wants to maintain its same income level?

Reference no: EM13149352

Questions Cloud

Possible explanations for financial results : The company's cash balance decreased $193 million with cash flows from operating activities (+$7.7 billion), investing activities (-$7.6 billion), and financing activities (-$207 million). Discuss possible explanations for these financial results.
Financial statement presentations relating to contract : The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow:
Indifference curve analysis to explain : How do you use indifference curve analysis to explain the price ; income and substitution effects and to demonstrate the delegation of the demand curve for different types of goods
Find minimum number of attendance days to receive discount : Students that are in the top 5% will receive a 20% off coupon at the "Crazy" cafeteria. What is the minimum number of attendance days that you should have in order to receive such discount?"
Target cost for the new price : What is the target cost for the new price if target operating income is 20% of sales. What is the change in operating income for the year if $18.00 is the new price and costs remain the same?
How does this alter the isocost and isoquant graph : demand for labor in China will drive up costs per worker there to $5 per hour. How does this alter the isocost and isoquant graph? d.Given these forecasts, where should you expand production?
Explain a system comprised of chloroform : A system comprised of chloroform, 1,4-dioxane, and ethanol exists as a two-phase vapor/liquid system at 50 degrees C and 55 kPa.
What level of protein structure must an enzyme have : What level of protein structure must an enzyme have to be regulated allosterically? Please provide an explanation for your answer.
Basics of determining operating profit : A firm operated at 90% of capacity for the past year, during which fixed costs were $320,000, variable costs were 60% of sales, and sales were $1,000,000. Operating profit was:

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determine the missing amounts

Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an amount is zero, enter in "0".

  Net cash flow from financing activities

repayments of long-term borrowings of $3.5 million, interest payments of $780,000, repurchase of treasury shares of $500,000 and cash dividends declared of $1.1 million. Net cash flow from financing activities equals.

  Prepare the journal entry to record organizational costs

Fontenot Corporation was organized in 2009 and began operations at the beginning of 2010. The company is involved in interior design consulting services. The following costs were incurred prior to the start of operations.

  Journal entry of purchase of long-term bonds

Karr Company purchased bonds with a face amount of $400,000 between interest payment dates. Karr purchased the bonds at 102, paid brokerage costs of $6,000, and paid accrued interest for three months of $10,000.

  Journal entry to record independent transaction

Prepare the journal entry to record each of the following independent transaction. (Use the number of the transaction in lieu of a date for identification purposes.)

  Calculate the equivalent units of production

There were 1,100 units in beginning goods in process inventory, and they were 70% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weight..

  Amount budgeted for the month

Andrea's Hobbies produces and sells a luxury animal pillow for $40.00 per unit. In the first month of operation, 3,000 units were produced and 2,250 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other infor..

  Adjusting journal entries and partial balance sheet

On jan 1 07 daniels company contained these liability accts. Accts payable 42,500 Sales tax payable 6,600 Unearned service revenue 19,000 During january

  Briefly describe what the company did wrong

Please find a real-world example of a company that has been in the news, and briefly describe what the company did wrong. Some ideas for companies include, but are not limited to, Enron, WorldCom, Andersen, Dell, and Xerox.

  Determining cost of goods sold and gross profit rate

At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,600,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold..

  Effective internal audit function in organization

Research professional standards of the IIA to identify recommendations for the organizaional reporting lines of authority appropriate for an effective internal audit function within an organization.

  How much interest expense will be recognized in 2012

A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14,703,109. Using effective-interest amortization, how much interest expense will be re..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd