21. TwoShaft Inc. manufactures a wide variety of parts for recreational boating, including boat…

 
   

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21. TwoShaft
Inc. manufactures a wide variety of parts for recreational boating, including
boat engines. The component is purchased by OEM (Original Equipment
Manufacturers) such as Mercury and Honda, for use in the larger and more
powerful outboards. The units sell for $660, and sales volume averages 32,000
units per year. Recently, TwoShaft’s major competitor lowered the price of the
equivalent part to $590. The market was very competitive, and TwoShaft realized
it had to meet the new price or lose significant market share. The controller
assembled the following data for the most recent year:
1clip_image001.jpg”>

The target cost for maintaining
current market share and profitability is (round to nearest cent):
A. $466.61.

B. $417.12.

C. $396.61.

D. $390.61.

E. $460.61.

Lens
Care Inc. (LCI) manufactures specialized equipment for polishing optical
lenses. There are two models – one mainly used for fine eyewear (F-32) and
another for lenses used in binoculars, cameras, and similar equipment (B-13).

The
manufacturing cost of each unit is calculated using activity-based costing,
using the following manufacturing cost pools:
1clip_image002.jpg”>

LCI
currently sells the B-13 model for $1,775 and the F-32 model for $1,220.
Manufacturing costs and activity usage for the two products are as follows:
1clip_image003.jpg”>

22.
The
product cost for model B-13 is:
A. $1,457.82.

B. $1,293.32.

C. $1,159.34.

D. $905.31.

E. $980.91.

23.
The
product cost for model F-32 is:
A. $1,457.82.

B. $1,293.32.

C. $1,159.34.

D. $905.31.

E. $980.91.

24.
The
profit margin based on manufacturing cost for model B-13 is:
A. $481.68.

B. $314.69.

C. $239.09.

D. $317.18.

E. $338.16.

25.
The
profit margin based on manufacturing cost for model F-32 is:
A. $481.68.

B. $314.69.

C. $239.09.

D. $317.18.

E. $338.16.

26. If
the market price for B-13 and F-32 are reduced to $1,695 and $1,095
respectively, and Lens Care wants to maintain market share and profitability,
what is the target cost for B-13 and F-32 (round to nearest whole dollar)?

A.
Option
A
B. Option
B
C. Option
C
D. Option
D
E. Option
E

27.
To achieve the target cost, Lens Care
plans to reduce materials handling costs. How many parts must be removed from
B-13 in order to achieve the target cost for B-13 (round up to whole units)?

A. 11

B. 46

C. 34

D. 28

E. 53

28.
To achieve the target cost, Lens Care
plans to reduce materials handling costs. How many parts must be removed from
B-13 in order to achieve the target cost for B-13 (round up to whole units)?

A. 11

B. 46

C. 34

D. 28

E. 53

1clip_image004.jpg”>

(round all
answers to nearest whole dollar):

Quality
Industries manufactures large workbenches for industrial use. Yewell Hartnet,
the Vice President for marketing at Quality Industries, concluded from market
analysis that sales were dwindling for Quality’s workbenches due to aggressive
pricing by competitors. Quality’s workbench sells for $1,140 whereas the
competition’s comparable workbench sells for $1,060. Yewell determined that a
price drop to $1,060 would be necessary to retain market share and annual sales
of 13,000 tables.

Cost data based on sales of 13,000
workbenches:
1clip_image005.jpg”>

29.
The
current cost per unit is:
A. $588.

B. $523.

C. $465.

D. $637.

E. $445.

30.
The
current profit per unit is:
A. $503.

B. $674.

C. $616.

D. $524.

E. $694.