What minimum price would you recommend

Assignment Help Cost Accounting
Reference no: EM132826193

Question - An umbrella manufacturer makes an average profit of Rs. 50 per unit on a selling price of Rs. 286 by producing and selling 60,000 units at 60% of potential capacity. The cost of sales per unit is as follows:

Direct Materials - Rs. 70

Direct Wages - Rs. 25

Factory Overheads - Rs. 125 (50% variable)

Selling Overheads - Re. 16 (75% fixed)

During the current year the company intends to produce the same number but estimates that the fixed cost would go up by 10% while the rates of direct wages and direct materials will increase by 8% and 6% respectively. However, the selling price cannot be changed.

Under this situation the company gets an offer for a further 20% increase in plant capacity.

Required - What minimum price would you recommend for an acceptance of the offer to insure the manufacturer an overall profit of Rs.33,46,000.

Reference no: EM132826193

Questions Cloud

What is the project unlevered cost of capital : What is the project's unlevered cost of capital? (Please express your answer in percentage points with one digit after the decimal point.]
What is the underlying share price : Given put-call parity of a European option, if for XYZ company the value of a put is 24, the value of a call is 50, What is the underlying share price
Identify who would be the first three individuals : Identify who would be the first three individuals you would seek to interview and what the first three questions you would ask those three individuals.
Determining the cash conversion cycle : Discuss the benefits the company stands to gain by accurately determining the cash conversion cycle (CCC).
What minimum price would you recommend : What minimum price would you recommend for an acceptance of the offer to insure the manufacturer an overall profit of Rs.33,46,000
What is the current yield of the? bond : Assume that a ?$1,000?-par-value bond has a coupon rate of 6% and will mature in 10 years. It has a current price quote of ?$908.06. Given this? information, an
What is the most would pay for the annuity : You currently earn 9% on low-risk investments comparable to the retirement annuity. Ignoring taxes, what is the most you would pay for this annuity?
Make weighted average cost of capital of lanka ventures : Debt capital represents 40% of the capital structure and Corporate tax rate 30%. Make Weighted average cost of capital of Lanka Ventures
Describe briefly the ahima code of ethics : For this assignment, write 2-3 pages following the APA style, including an introduction, headers, and a conclusion. Write clearly and precisely, be creative.

Reviews

Write a Review

Cost Accounting Questions & Answers

  What is the total manufacturing cost per ceiling fan

What is the total manufacturing cost per ceiling fan - Brannon Company manufactures ceiling fans and uses an activity-based costing system.

  Calculate the increase in sales over the current volume

Product X is a consumer product with a retail price of $9.95. Retailer's margins on the product are 40% (based on the selling price to consumers) and wholesaler's margins are 8% (based on the selling price to retailers). The size of the market is ..

  Arrow industries employs a standard cost system

Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product.

  Determine the annual depreciation expense

Determine the annual depreciation expense using the straight-line method and prepare the journal entry to record the expense.

  Compute the new weighted-average contribution margin

Compute the new weighted-average contribution margin per ticket and calculate the total number of tickets Wet Weekend must sell to break even.

  Compute the manufacturing overhead rate for the year

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Compute the manufacturing overhead rate for the year. What is the amount of under or overapplied overhead at December 31

  Provide an explanation of your treatment of each item

Prepare a list of the costs that should be assigned to Job 123. Provide an explanation of your treatment of each item and discuss briefly how information concerning the cost of individual jobs can be used.

  Calculate the cost of the inventory

Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31. Calculate the cost of the inventory at January 31, under the FIFO method.

  Define basis of the amount prior to applying the tax rate

Is there a percentage deduction on the basis of the amount prior to applying the tax rate

  Easton corporation makes two diverse boat anchors - a

easton corporation makes two diverse boat anchors - a traditional fishing anchor and a high-end yacht anchor - using

  Prepare first on alerts bank reconciliation

Prepare First on Alerts bank reconciliation at December 31 - The bank statement also shows a $30 service charge and $20 of interest revenue that First on Alert earned on its bank balance.

  Calculate activity cost rates for each of activity pools

Calculate the activity cost rates for each of the activity cost pools and calculate the amount of "Support Expenses" to be allocated to each of the four product lines for each activity.

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