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CHAPTER 15
Target Costing and Cost Analysis for Pricing
Decisions
ANSWERS TO REVIEW QUESTIONS
15.1
In the long run, every organization must price its product or service above the total
cost of production. While the market for the product also is critically important, costs
cannot be ignored.
15.2
The statement that prices are determined by production costs is too simplistic.
Although firms must price their products and services above their total costs in the
long run, management cannot ignore demand issues and the economic environment.
Setting prices generally is a balance between cost-related issues and economic
market forces.
15.3
15.4
15-1
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15.5
In most industries, both market forces and cost considerations heavily influence
prices. No organization can price its products below their production costs in the
long run. On the other hand, no company can set prices at cost plus a markup
without keeping an eye on the market. The product or service must be sold at a price
customers are willing to pay.
15.6
The profit-maximizing price is the price for which the associated quantity is
determined by the intersection of the marginal cost and marginal revenue curves.
This intersection is shown in Exhibit 15-3 in the text.
15.7
15-8
15.9
15.10 Determining the best approach to pricing requires a cost-benefit trade-off. While the
marginal-cost, marginal-revenue paradigm results in a profit-maximizing price, only a
sophisticated and costly information system can collect marginal-cost data. Thus,
the firm will incur greater cost in order to obtain information for better decisions.
15-2
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15-3
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(2) Variable-cost data do not require allocation of common fixed costs to individual
product lines.
(3) Variable-cost data are exactly the type of information managers need when facing
certain decisions, such as whether to accept a special order.
15.16 The behavioral problem that can result from the use of a variable-cost pricing
formula is that managers may perceive the variable cost of a product or service as
the floor for the price. They may tend to set the price too low for the firm to cover its
fixed costs.
15.17 Return-on-investment pricing is an approach under which the price is set so that it
will cover costs and also earn a profit that will provide a target return on the invested
capital.
15.18 Price-led costing refers to the process under target costing of first determining the
acceptable market price for a product or service and then determining the cost at
which the product or service must be produced.
15.19 To be successful at target costing, management must listen to the companys
customers. By doing so, management will learn the products, features, and quality
that customers are willing to buy as well as the price they are willing to pay.
15.20 Value-engineering is a cost-reduction and process-improvement technique used to
help bring the cost of manufacturing a product or providing a service into line with
its target cost.
15.21 Tear-down methods can be used in a service-industry firm just as they are used in
the manufacturing industry. The various steps in providing a service can be
analyzed for cost improvements just as a products materials and manufacturing
operations can be analyzed for the same purpose.
15.22 Under time-and-material pricing, the price includes a cost-based charge for labor, a
cost-based charge for material, and generally a markup on one or both of these
production-cost factors.
15.23 When a firm has excess capacity, there is no opportunity cost in accepting an
additional production job. Therefore, it is not necessary to reflect such an
opportunity cost in setting a bid price. On the other hand, if the firm is already at full
capacity, there is an opportunity cost to accepting another production job. In this
case, it is appropriate to include in the price an estimate of the opportunity cost
associated with the job for which the bid is being prepared.
15-4
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15.24 The decision to accept or reject a special order and the selection of a price for a
special order are similar decisions. If a price has been offered for a special order,
management can base its acceptance or rejection decision on whether or not that
price covers the incremental cost of producing the order. Another way of viewing the
problem is to set the minimum price for the special order at a level sufficient to cover
the incremental cost of producing the order.
15.25 (a) Skimming pricing: Setting a high initial price for a new product in order to reap
short-run profits. Over time, the price is reduced gradually.
(b) Penetration pricing: Setting a low initial price for a new product in order to
penetrate a market deeply and gain a large and broad market share.
(c) Target costing: Conducting market research to determine the price at which a
new product will sell and then, given the likely sales price, computing the cost for
which the product must be manufactured in order to provide the firm with an
acceptable profit margin. Then engineers and cost analysts work together to
design a product that can be manufactured for the allowable cost. This process
is used widely in the development stages of new products.
15-26 (a) Unlawful price discrimination: Quoting different prices to different customers for
the same product or service, even though the different prices cannot be justified
by differences in the cost incurred to produce, sell, and deliver the product or
service.
(b) Predatory pricing: Temporarily cutting a price to broaden demand for a product
with the intention of later restricting the supply and raising the price again.
15-27 Traditional, volume-based product-costing systems often overcost high-volume and
relatively simple products while undercosting low-volume and complex products.
This practice can result in overpricing high-volume and relatively simple products
and underpricing low-volume and complex products. Such strategic pricing errors
can have a disastrous impact on a firms competitive position.
15-5
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SOLUTIONS TO EXERCISES
EXERCISE 15-28 (25 MINUTES)
Dollars
Total cost
Total revenue
q*
Dollars per unit
Marginal cost
p*
q*
15-6
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Education.
15-7
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Education.
(2)
Quantity
Sold per
Month
Unit
Sales
Price
20
40
60
80
100
......................................
$500
......................................
475
......................................
450
......................................
425
......................................
400
(3)
Total
Revenue
per
Month*
(4)
Changes
in Total
Revenue
....................................................................................
$10,000
....................................................................................
19,000 } .................... $9,000
....................................................................................
27,000 } .................... 8,000
....................................................................................
34,000 } .................... 7,000
6,000
....................................................................................
40,000 } ....................
15-8
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Education.
Total revenue
$40,000
$35,000
$30,000
$25,000
$20,000
Curve is increasing
throughout its range,
but at a declining rate
$15,000
$10,000
$ 5,000
20
40
60
80
100
Quantity sold
per month
15-9
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Education.
(1)
(2)
Quantity
Produced
Average
and Sold per
Cost per
Month
Unit
20
......................................
$450
40
......................................
425
60
......................................
410
80
......................................
430
100
......................................
445
(3)
(4)
Total
Changes
Cost per
in Total
Month*
Cost
....................................................................................
$ 9,000
....................................................................................
17,000 } ..................... $ 8,000
....................................................................................
24,600 } ..................... 7,600
....................................................................................
34,400 } ..................... 9,800
} ..................... 10,100
....................................................................................
44,500
15-10
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Total cost
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$ 5,000
20
40
60
80
100
Quantity sold
per month
15-11
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15-12
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Education.
(1)
(2)
(3)
(4)
(5)
Quantity
Total
Total
Produced
Sales
Revenue
Cost
Profit
and Sold
Price
per
per
per
per Month
per Unit
Month*
Month
Month**
20
......................................
$500 ....................................................................................
$10,000
$ 9,000 ...........................................................
$1,000
40
......................................
475 ....................................................................................
19,000
17,000 ...........................................................
2,000
60
......................................
450 ....................................................................................
27,000
24,600 ...........................................................
2,400
80
......................................
425 ....................................................................................
34,000
34,400 ...........................................................
(400)
100
......................................
400 ....................................................................................
40,000
44,500 ...........................................................
(4,500)
Column (1) times average cost per unit given in the preceding exercise.
3.
Of the five candidate prices listed, $450 is the optimal price. This price produces a
monthly profit of $2,400, which is greater than the profit at the other four candidate
prices.
15-13
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Total cost
$40,000
Total revenue
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$ 5,000
20
40
60
80
100
Quantity sold
per month
15-14
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$495
1.125
Allocated fixed
selling and
administrative cost
2.
= $440
total
unit
cost
all
manufacturing
costs
$44
variable
selling and
administrative cost
$66
a.
b.
c.
15-15
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540,000p
270,000p
54,000p
324,000p
216,000p
97,500p
118,500p
=
Sales price required
30,000p
3.00 p per unit
10,000
As an alternative approach, let X denote the price required in order to earn additional
profit of 30,000p on the special order:
10,000X 10,000(4.50p)
30,000p
10,000X
75,000p
15-16
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(2)
(3)
Total cost
profit required to
achieve target ROI
annual
volume
15-17
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1.
Markup percentage
$60,000
administrative costs
fixed costs
480 $400
= 131.25%
Thus, the Wave Darters price would be set equal to $925, where
$925 = $400 + ($400 131.25%).
15-18
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2.
=
=
=
=
=
=
$60,000
Markup percentage =
$60,000 $72,000
$312,000
= 42.31% (rounded)
Thus the Wave Darters price would be set equal to $925, where
$925 = $650 + ($650 42.31%) with rounding.
*$650 = absorption manufacturing cost (from Exhibit 15-5).
The other amounts used in this formula were defined in requirement (1).
15-19
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cost
material handling
incurred
annual cost of materials
incurred
2.
material
cost
1.05
15-20
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SOLUTIONS TO PROBLEMS
PROBLEM 15-38 (45 MINUTES)
1.
The order will boost Heartlands net income by $13,950, as the following calculations
show.
Sales revenue......................................................
Less: Sales commissions (10%)........................
Less manufacturing costs:
Direct material...............................................
Direct labor....................................................
Variable manufacturing overhead*...........................
Total manufacturing costs
Income before taxes...........................................
Income taxes (40%).............................................
Net income ......................................................
$82,500
8,250
$74,250
$14,600
28,000
8,400
51,000
$ 23,250
9,300
$ 13,950
Yes. Although this amount is below the $82,500 full-cost price, the order is still
profitable. Heartland can afford to pick up some additional business, because the
company is operating at 75 percent of practical capacity.
Sales revenue............................................................
Less: Sales commissions (10%)..............................
Less manufacturing costs:
Direct material
Direct labor
$63,500
6,350
$57,150
$14,600
28,000
8,400
51,000
$ 6,150
2,460
$ 3,690
Note that the fixed manufacturing overhead and fixed corporate administration costs
are not relevant in this decision, because these amounts will remain the same
regardless of what Heartlands management decides about the order.
15-21
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4.
Profits will probably decline. Heartland originally used a full-cost pricing formula to
derive the $82,500 bid price. A drop in the selling price to $63,500 signifies that the
firm is now pricing its orders at less than full cost, which would decrease
profitability.
Reduced prices could lead to an increase in income if the company were able to
generate additional volume. This situation will not occur here, because the problem
states that Heartland has operated, and will continue to operate, at 75 percent of
practical capacity.
5. In the electronic version of the solutions manual, press the CTRL key and click on the
following link: 10E - BUILD A SPREADSHEET 15-38.XLS
15-22
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= $20.00 +
$135,000
12,000
hourly charge to
cover profit magin
+ $5.00
material cost
$31,250
2.
PRICE QUOTATION
Time charges:
$ 97,000
8,250
$105,250
= 500 DLH
Traceable out-of-pocket costs:
Direct labor ($16.00 500) .....................................................................
Variable overhead ($12.00 500) ..........................................................
Administrative cost ................................................................................
Total traceable out-of-pocket costs...................................................
Minimum price per dose =
=
2.
$ 8,000
6,000
2,000
$16,000
$16,000
1,000,000
= $.016
As in requirement (1), 500 direct-labor hours are required for the job.
Direct labor ($16.00 500) .........................................................................
Variable overhead ($12.00 500) ..............................................................
Fixed overhead ($20.00 500) ..................................................................
Administrative cost ....................................................................................
Total cost .................................................................................................
Maximum allowable return (15%) ..............................................................
Total bid price .........................................................................................
$ 8,000
6,000
10,000
2,000
$26,000
3,900
$29,900
$29,900
= 1,000,000 doses
15-24
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Education.
Under the supposition that the price computed by Manhattan Pharmaceuticals, Inc.
using Wyants criterion is greater than $0.03, the factors that Manhattans
management should consider before deciding whether or not to submit a bid at the
maximum allowable price include whether Manhattan Pharmaceuticals has excess
capacity, whether there are available jobs on which earnings might be greater, and
whether the maximum bid of $0.03 contributes toward covering fixed costs.
The manufacturing overhead rate is $27.00 per direct-labor hour, and the product
cost includes $13.50 of manufacturing overhead per pressure valve. Accordingly, the
direct-labor hours per finished valve is 1/2 hour ($13.50 $27.00). Therefore, 30,000
units per month would require 15,000 direct-labor hours.
2.
$ 900,000
1,080,000
540,000
$2,520,000
Fixed overhead:
Supervisory and clerical costs
(4 months @ $18,000) .......................................................
Total incremental costs ..........................................................
Total incremental profit ..........................................................
72,000
$2,592,000
$ 828,000
The minimum unit price that Wolverine Valve and Fitting Company could accept
without reducing net income must cover the variable unit cost plus the additional
fixed costs.
Variable unit cost:
Direct material ..................................................................... $ 7.50
Direct labor ..........................................................................
9.00
Variable overhead ............................................................... 4.50
Additional fixed cost ($72,000 120,000) .............................
Minimum unit price .................................................................
4.
$21.00
.60
$21.60
Wolverines management should consider the following factors before accepting the
Glasgow Industries order:
The effect of the special order on Wolverines sales at regular prices.
The possibility of future sales to Glasgow Industries and the effects of
participating in the international marketplace.
The companys relevant range of activity and whether or not the special order will
cause volume to exceed this range.
The effect on machinery or the scheduled maintenance of equipment.
Other possible production orders that could come in and require the capacity
allocated to the Glasgow job.
5. In the electronic version of the solutions manual, press the CTRL key and click on the
following link: 10E - BUILD A SPREADSHEET 15-41.XLS
15-26
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Cost-plus pricing begins by computing an items cost and then adds an appropriate
markup. The result is the items selling price. In contrast, target costing begins by
determining an appropriate selling price. A target profit is next subtracted from that
price to yield the cost (i.e., the target cost) that must be achieved.
Target costing could be labeled price-led costing because it begins by determining a
target selling price. In contrast, cost-plus pricing methods begin with the cost and
culminate in determination of the selling price.
2.
3.
$ 90
225
150
75
$540
135
$675
Lehighs markup is $135, which is 20% of the current $675 selling price ($135
$675). To achieve a 20% markup on a $585 selling price, the company must reduce
its costs by $72.
Selling price..
Less: 20% markup ($585 x 20%).
Target cost
$585
117
$468
Current cost..
Less: Target cost.
Required cost reduction
$540
468
$ 72
15-27
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Education.
Yes. The company should focus its efforts on trimming non-value-added costs.
These costs are associated with non-value-added activities (i.e., activities that are
either (a) unnecessary and dispensable or (b) necessary, but inefficient and
improvable).
5.
If costs cannot be reduced below $540, Lehigh will have to reduce its markup to
remain competitive. Assuming a desire to achieve the going market price of $585,
the markup must equal $45 ($585 - $540), or 8.33% of cost ($45 $540). Given that
the current markup on cost is 25%, a reduction of 16.67% is needed (25.00% - 8.33%).
6.
The statement means that selling prices are a function of market conditions;
however, the selling prices must cover a companys costs in the long run. Also, in a
number of industries, prices are based on costs. Yet, the prices are subject to the
reaction of customers and competitors.
7.
In the electronic version of the solutions manual, press the CTRL key and click on
the following link: 10E - BUILD A SPREADSHEET 15-42.XLS
15-28
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Education.
The minimum price per blanket that Detroit Synthetic Fibers, Inc. could bid without
reducing the companys net income is $48 calculated as follows:
Raw material (6 lbs. @ $3.00 per lb.) .........................................................
Direct labor (.25 hrs. @ $14.00 per hr.) .....................................................
Machine time ($20.00 per blanket) ............................................................
Variable overhead (.25 hrs. @ $6.00 per hr.) .............................................
Administrative costs ($5,000 1,000) .......................................................
Minimum bid price ..................................................................................
2.
Using the full cost criteria and the maximum allowable return specified, Detroit
Synthetic Fibers, Inc.s bid price per blanket would be $59.80 calculated as follows:
Relevant costs from requirement (1) ........................................................
Fixed overhead (.25 hrs. @ $16.00 per hr.) ...............................................
Subtotal ...................................................................................................
Allowable return (.15 $52.00) .................................................................
Bid price ..................................................................................................
3.
$18.00
3.50
20.00
1.50
5.00
$48.00
$48.00
4.00
$52.00
7.80
$59.80
Factors that management should consider before deciding whether to submit a bid
at the maximum acceptable price of $50 per blanket include the following:
The company should be sure there is sufficient excess capacity to fill the order
and that no additional investment is necessary in facilities or equipment that
would increase fixed costs.
If the order is accepted at $50 per blanket, there will be a $2 contribution per
blanket to cover fixed costs. However, the company should consider whether
there are other jobs that would make a greater contribution.
Acceptance of the order at a low price could cause problems with current
customers who might demand a similar pricing arrangement.
15-29
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Target costing is more appropriate. MSC is limited in terms of what price it can
charge due to market conditions. A cost-plus-markup approach will use the desired
markup for the company; however, the resulting price may too high and not
competitive. In such an environment it makes more sense to use target costing,
which begins with the price to be charged and works backward to determine the
allowable cost.
2.
3.
4.
5.
To achieve a 14% return and a $265 revenue-per-hour figure, the company must trim
its costs. MSC could use value engineering, a technique that utilizes information
collected about a services design and associated production process. The goal is
to examine the design and process and then identify improvements that would
produce cost savings.
15-30
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Target costing is the design of a product, and the processes used to produce it, so
that ultimately the product can be manufactured at a cost that will enable a firm to
make a profit when the product is sold at an estimated market-driven price. This
estimated price is called the target price, the desired profit margin is called the target
profit, and the cost at which the product must be manufactured is called the target
cost.
2.
15-31
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4.
Current
Increase/
(Decrease)
Revised
Material:
Purchased components..................................
All other............................................................
$215
85
Labor:
Manufacturing, direct......................................
Setups...............................................................
Material handling.............................................
Inspection.........................................................
130
18
36
46
$ 30
(18)
(36)
(46)
160
0
0
0
Machining:
All......................................................................
70
(10)
60
Other:
Finished-goods warehousing.........................
Warranty*..........................................................
10
20
(10)
(8)
0
12
Total cost................................................................
$630
$(98)
$532
$215
85
*40% reduction
15-32
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$ 225,000
225,000
$ 450,000
$1,125,000
75,000
budgeted overhead
budgeted direct -labor hours
$1,125,000
75,000
3.
Standard
Total cost ....................................................................................................
$600.00
Markup (15% of cost)
90.00
Standard: $600 .15 .............................................................................
______
Deluxe: $750 .15 ..................................................................................
Price ............................................................................................................
$690.00
Deluxe
$750.00
112.50
$862.50
Department I Department II
Budgeted overhead (from requirement 1).................................................
$675,000
$450,000
Budgeted direct-labor hours .....................................................................
37,500
37,500
Calculation of predetermined overhead rate ............................................
37,500
$675,000
$450,000
37,500
$12.00
15-33
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5.
6.
Standard
Direct material ............................................................................................
$240
Direct labor .................................................................................................
210
Manufacturing overhead:
Department I:
36
Standard: 2 $18 ...............................................................................
Deluxe: 8 $18 ...................................................................................
Department II:
96
Standard: 8 $12 ...............................................................................
Deluxe: 2 $12 ...................................................................................
Total cost ....................................................................................................
$582
Deluxe
$390
210
Standard
Total cost (from requirement 4)..................................................................
$582.00
Markup (15% of cost)
87.30
Standard: $582 .15 ..............................................................................
______
Deluxe: $768 .15 ..................................................................................
Price ............................................................................................................
$669.30
Deluxe
$768.00
144
24
$768
115.20
$883.20
The management of Super Sounds, Inc. should use departmental overhead rates. The
overhead cost structures in the two production departments are quite different, and
departmental rates more accurately assign overhead costs to products. When the
company used a plantwide overhead rate, the Standard speakers were overcosted and
the Deluxe speakers were undercosted. This in turn resulted in the Standard model
being overpriced and the Deluxe model being underpriced. The cost and price
distortion resulted from the following facts: (1) the Standard speakers spend most of
their production time in Department II, which is the least costly of the two
departments; and (2) the Deluxe speakers spend most of their production time in
Department I, which is more costly than Department II.
15-34
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Target costing is market driven, beginning with a determination of the selling price
that customers are willing to pay. That price is dependent on the product they
purchase and the products features. It is only natural that a marketing team
becomes heavily involved in this process, since customer feedback is crucial to the
design process.
2.
Add cabinet doors: [(10 x 1) + (20 x 2) + (30 x 3) + (60 x 4) + (80 x 5)] = 780; 780 200
= 3.900
Expand storage area: [(10 x 1) + (40 x 2) + (70 x 3) + (50 x 4) + (30 x 5)] = 650; 650
200 = 3.250
Add security lock: [(30 x 1) + (60 x 2) + (50 x 3) + (40 x 4) + (20 x 5)] = 560; 560 200 =
2.800
New appearance for table top: [(10 x 1) + (20 x 2) + (50 x 3) + (60 x 4) + (60 x 5)] = 740;
740 200 = 3.700
Extend warranty: [(40 x 1) + (70 x 2) + (30 x 3) + (35 x 4) + (25 x 5)] = 535; 535 200 =
2.675
15-35
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Education.
4.
(a)
Danish Interiors currently earns a $48 profit on each table sold ($240 - $192),
which translates into a 20% markup on sales ($48 $240). The current
competitive market price is $285, which means that if the company maintains
the 20% markup, it will earn $57 ($285 x 20%) per unit. The maximum
allowable cost is therefore $228 ($285 - $57).
(b)
Customers feel most strongly about adding cabinet doors and giving the
table top a new appearance. Both of these features can be added, and Danish
Interiors will be able to earn its 20% markup. The third and fifth most
desirable features (the expanded storage area and extended warranty) are too
costly. If it desires, management could also add a lock to the storage area.
Supporting calculations follow.
Maximum allowable cost...
Less: Current cost...
Cost of additional features
$228.00
192.00
$ 36.00
$ 18.00
12.75
$ 30.75
__ 4.95
$ 35.70
An expanded storage area would be the most logical additional feature in view of its
no. 3 ranking. Danish Interiors might use value engineering to study the design and
production process of both the table as currently manufactured as well as the
proposed new features. The goal is to identify improvements and associated
reductions in cost that may allow the company to add previously rejected options.
15-36
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Education.
SOLUTIONS TO CASES
CASE 15-48 (40 MINUTES)
1.
2.
$307,200
198,000
118,800
$624,000
312,000
$936,000
$1,166,400
$1,944,000
$307,200
198,000
71,280
42,240
$618,720
= 60%
variable
total overhead
rate
overhead proportion
= ($10.80) (.6)
= $6.48
15-37
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Education.
3.
$14,400
9,120
$5,280
8
$42,240
Lyan Companys assistant purchasing manager is not acting ethically. The details of
the bid submitted by Bair Company are confidential between Bair Company and Lyan
Company. It is unfair and unethical to give this information to Bairs competitor. If
Lyan Company had wanted competing bids on the specialized equipment, the bids
should have been solicited at the same time from the relevant set of manufacturers.
Each competing firm should receive the same specifications on the customized
equipment and be given the same time frame in which to complete the bid. Moreover,
the competing firms should be made aware that more than one bid is being solicited.
15-38
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Education.
Handy Household Products, Inc. should price the standard compound at $44 per
case and the commercial compound at $60 per case. The contribution margin is the
highest at these prices as shown in the following calculations:
Standard Compound
Selling price per case ................................................................................
$ 38 $ 40 $ 42
Variable cost per case ................................................................................
32 32 32
Contribution margin per case ...................................................................
$ 6 $ 8 $ 10
Volume in cases (in thousands) ................................................................
120 100 90
Total contribution margin (in thousands) .................................................
$ 720 $ 800 $ 900
$ 44
32
$ 12
80
$ 960
Commercial Compound
Selling price per case ................................................................................
$ 52 $ 54 $ 60 $ 64
Variable cost per case ................................................................................
42 42 42 42
Contribution margin per case ...................................................................
$ 10 $12 $ 18 $ 22
Volume in cases (in thousands) ................................................................
175 140 100 55
Total contribution margin (in thousands) .................................................
$1,750 $1,680 $1,800 $1,210
$ 46
32
$ 14
50
$ 700
70
42
28
35
980
15-39
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Education.
a. Management should continue to operate during the final six months of the
current year because any shutdown would be temporary. The company intends to
remain in the business and expects a profitable operation during the next year.
This is a short-run decision problem. Therefore, the fixed costs are irrelevant to
the decision, because they cannot be avoided in the short run. The products do
have a positive contribution margin so operations should continue.
HANDY HOUSEHOLD PRODUCTS, INC.
SHREVEPORT PLANT
PROJECTED CONTRIBUTION MARGIN
FOR THE SIX-MONTH PERIOD ENDING DECEMBER 31
(IN THOUSANDS)
Standard Commercial
Sales ............................................................................................................
$2,300
$2,450
Variable costs:
Selling and administrative .....................................................................
$ 400
$ 490
Manufacturing .........................................................................................
1,200
980
Total variable costs ............................................................................
$1,600
$1,470
Contribution margin ...................................................................................
$ 700
$ 980
Total
$4,750
$ 890
2,180
$3,070
$1,680
b. Management should consider the following qualitative factors when making the
decision about the Shreveport Plant.
The effect on employee morale.
The effect on market share.
15-40
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Education.