Question :
141.A cross-functional team at Enrich, Inc. developing a new product : 1302819
141.A cross-functional team at Enrich, Inc. is developing a new product using the target costing method. Product features in comparison to competing products suggest a price of $1,500 per unit. The company requires a profit of 30% of selling price. How much is the target cost per unit?
142.Savor Enterprises has determined the following costs for customers:
Order processing (per order)$ 8.00
Additional handling costs if order marked rush (per order)10.00
Customer service calls (per call)14.00
Relationship management costs (per customer per year)3,500
In addition to these costs, product costs amount to 85 percent of sales. In the prior year, the company had the following experience with Hanson Electronics, one of its customers:
Sales $54,000
Number of orders 250
Percent of orders marked rush 70%
Calls to customer service 160
Calculate the profitability of the Hanson Electronics account.
143.Randall Equipment uses activity-based pricing. The pricing structure is to charge customers the direct cost of the products they order with a markup of 40% on direct costs plus the cost of the services that are provided. The service costs are $8.00 per order, $2.00 for each product that is ordered, and $1.50 per pound for shipping.
Wilson, Inc. made 10 orders for goods with a total direct cost of $4,000. Wilson ordered 50 different products that weighed a total of 560 lbs. What is the total price paid by Wilson?
144.Moscovitz Produce developed the following information on indirect costs for assessing customer profitability.
Cost PoolAnnual CostCost DriverAnnual Driver QuantityCustomer
Acme DeliBoson Cafe
Processing electronic orders$1,000,000Number of orders500,0005000
Processing non-electronic orders$2,000,000Number of orders400,0000 1000
Picking orders$3,000,000Number of different products ordered1,000,0008001800
Packaging orders$1,500,000Number of items ordered50,000,0001,000,000 1,000,000
Returns$3,000,000Number of returns50,0002200
Acme Deli and Boson Cafe each generated revenues in the last year of $600,000 and had direct costs associated with their orders of $450,000. How much is the cost per unit of the cost driver in each of the cost pools?
145.Project Depot has determined the following costs for its customers using an activity-based costing system:
Order processing (per order) $ 6
Additional handling costs if order marked rush (per order) 9
Customer service calls (per call) 14
Relationship management costs (per customer per year) 3,500
In addition to these costs, product costs amount to 85 percent of sales. In the prior year, the company had the following experience with one of its customers, Shannon Tools:
Sales $54,000
Number of orders 250
Percent of orders marked rush 70%
Calls to customer service 160
For the coming year, Project Depot has told Shannon Tools that it will be switched to an activity-based pricing system. In addition to regular prices, Shannon Tools will be required to pay:
Order processing (per order) $ 8
Additional handling costs if order marked rush (per order) 10
Customer service calls (per call) 18
Calculate the expected profitability of the Shannon Tools account for the coming year if activity is the same as in the prior year.
146.APL Internet Services has analyzed its customer and order handling data for the past year and has determined the following costs:
Order processing cost per order $ 4
Customer tech support calls (per call) 7
Additional costs if tech support is after hours 12
Relationship management costs (per customer per year) $950
In addition to these costs, product costs amount to 80% of sales. In the prior year, APL had the following experience with Tapper Recreation, one of its customers:
Sales $9,400
Number of orders 42
Calls to tech support 62
Percent of tech support calls after hours 40%
For the coming year, APL has told Tapper Recreation that it will be switched to an activity-based pricing system. In addition to regular prices, Tapper will be required to pay:
Order processing (per order) $ 7
Customer tech support calls (per call) 15
Additional costs if a tech support call is after hours 28
Calculate the total revenue to be billed to Tapper Recreation if activity is the same as in the prior year.
