1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
EleoNora [17]
3 years ago
10

Peachtree Doors, Inc. is in the process of setting a target price on its newly designed patio door. Cost data relating to the do

or at a budgeted volume of 5,000 units is as follows:
Per Unit Total
Direct materials $100
Direct labor 170
Variable
manufacturing
overhead 80
Fixed
manufacturing
overhead $750,000
Variable selling
and
administrative
expenses 25
Fixed selling
and
administrative
expenses 375,000
Peachtree uses cost-plus pricing that provides it with a 25% ROI on its patio door line. A total of $4,000,000 in assets is committed to production of the new door
Compute the following under the absorption-cost approach:
Markup percentage needed to provide desired ROI
Target price of the patio door.
Business
2 answers:
sattari [20]3 years ago
3 0

Answer:

a) 60%

b) $800

Explanation:

a)

                                                                                         Unit price

Direct materials                                                                $100

Direct labor                                                                       $170

Variable manufacturing overhead                                   $80

Fixed manufacturing overhead ($750,000 ÷ 5,000)      $150

Total manufacturing cost = $100 + $170 + $80 + $150 = $500

The mark-up percentage to provide a 25% (0.25) ROI:

Therefore, mark up percentage is given as:Mark -up=\frac{[ROI*(Total-assets/volume)]+[var.adm.exp+(fix.adm.exp/volume)]}{Total-manufacturing-cost} \\Mark-up=\frac{[0.25*(4000000/5000)]+[25+(375000/5000)]}{500} =\frac{200+100}{500} =0.6

mark up percentage = 60%

b) Target price = Total manufacturing cost + (Total manufacturing cost × mark up percentage) = $500 + ($500 × 0.6) = $800

worty [1.4K]3 years ago
3 0

Answer:

A. 60%

B. $800

Explanation:

Base on the scenario been described in the question, we have the following

a)

                                                                                         Unit price

Direct materials                                                                $100

Direct labor                                                                       $170

Variable manufacturing overhead                                   $80

Fixed manufacturing overhead ($750,000 ÷ 5,000)      $150

Cost of manufacturing= $100 + $170 + $80 + $150

Cost of manufacturing = $500

The mark-up percentage to given at 25% (0.25) ROI:

The mark up percentage is given as follows

Our mark up percentage = 60%

b) Target price = Total manufacturing cost + (Total manufacturing cost × mark up percentage) = $500 + ($500 × 0.6) Total target = $800 as our total target

You might be interested in
Which of the following is true?a. It is possible for total utility to rise as marginal utility falls. b. Marginal utility is the
Serga [27]

Answer:

The correct answer is letter "D": A and C.

Explanation:

Utility is the satisfaction or joy an individual perceives by consuming a given good or service. Marginal utility is the satisfaction perceived by consuming one more unit of a good or receiving a service one more time. Total utility is the aggregate utility as a result of adding the number of goods or services consumed.

<em>When marginal utility starts falling, total utility could still be rising since even if the consumer is not enjoying the same way the consumption of a good the individual is still adding more units to the consumption. However, there will a point in which the consumption of the good will not represent any satisfaction to the individual not adding more units anymore, thus, total utility starts dropping.</em>

6 0
3 years ago
You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the dis
larisa [96]

Answer:

NPV Project A = - $825.31

NPV Project B = $6119.89

So, at a discount rate of 8.5%, Project B should be accepted.

NPV Project A = - $6804

Npv Project B = - $3764.48

So, at a discount rate of 13%, neither of the projects should be accepted.

Explanation:

One of the methods to evaluate a project is to determine the NPV or Net Present Value from the project. If a project provides a positive NPV after discounting the cash flows from the project at a set discount rate, the project should be accepted. If the project gives a negative NPV, the project should be discarded.

The NPV is calculated as follows,

NPV = CF1 / (1+r)  +  CF2 / (1+r)^2 + ... + CFn / (1+r)^n - Initial cost

Where,

  • CF1, CF2, ... represents the cash flows in year 1 and year 2 and so on
  • r is the discount rate

<u>At 8.5% discount rate</u>

NPV Project A = 31000/(1+0.085)  +  31000/(1+0.085)^2  +  31000/(1+0.085)^3 - 80000

NPV Project A = - $825.31

NPV Project B = 110000 / (1+0.085)^3  -  80000

NPV Project B = $6119.89

So, at a discount rate of 8.5%, Project B should be accepted.

<u>At 13% discount rate</u>

NPV Project A = 31000/(1+0.13)  +  31000/(1+0.13)^2  +  31000/(1+0.13)^3 - 80000

NPV Project A = - $6804

NPV Project B = 110000 / (1+0.13)^3  -  80000

Npv Project B = - $3764.48

So, at a discount rate of 13%, neither of the projects should be accepted.

4 0
3 years ago
Harold and Zack have pooled their money together to buy real estate but have filed no formal papers to form a business. Harold,
Alex777 [14]

Answer: a. Partnership

Explanation:

Partnership could be defined as a process where two or more group of persons join their resources together to form a business or an investment, if it's a business, it is ran by both of them and the profit and loss realised is been shared amongst them. During partnership, the ratio of capital invested determines the ratio of profit that would be realised by the different persons. Harold and Zack combining resources to own a real estate investment is known as capital despite not signing legally for it yet.

7 0
3 years ago
A company is setting its direct materials and direct labor standards for its leading product. Direct materials cost from the sup
podryga [215]

Direct Material Cost Per Square Foot= 8+.1= 8.1 per square foot.

5 0
3 years ago
Which of the following assists companies in raising capital, advise firms on major transactions such as mergers or financial res
o-na [289]

Answer:

Investment banks.

Explanation:

Investment banking is the financial service described in the paragraph, could be a company or a division of it, dedicate it to give advisory about financial transactions, raising capital, even-though restructuring and mergers activities.

6 0
3 years ago
Other questions:
  • The executive leadership team of a large corporation is analyzing a report. The report's contents have information that can be u
    15·1 answer
  • In what way does the kettle falls five case illustrate a weakness of a federal system? choose the best answer.
    14·1 answer
  • North Around, Inc. stock is expected to return 22 percent in a boom, 13 percent in a normal economy, and −15 percent in a recess
    11·1 answer
  • The amount of fica tax that employers must pay is twice the amount of the fica taxes withheld from their employees. true or fals
    7·1 answer
  • A fixed asset with a five-year estimated useful life and no scrap value is sold at the end of the second year of its useful life
    14·1 answer
  • The balance sheet of Cattleman's Steakhouse shows assets of $85,900 and liabilities of $13,500. The fair value of the assets is
    11·1 answer
  • Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $6
    8·1 answer
  • You are planning to save for retirement over the next 25 years. To do this, you will invest $1,000 a month in a stock account an
    5·1 answer
  • Pecan acquires Southern in an acquisition reported as a merger. The acquisition results in $50 million in goodwill. The acquisit
    8·1 answer
  • Which company provides business credit rating services for businesses looking o finance loan through bank????? I put the picture
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!