Question

Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known...

Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 56,500 parts in the coming year. While the demand for Williams’s part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industry’s current downturn.

Total Costs
Variable manufacturing $ 4,667,000
Variable selling and administrative 842,650
Facility-level fixed overhead 2,332,875
Fixed selling and administrative 662,495
Batch-level fixed overhead 347,000
Total investment in product line 22,337,000
Expected sales (units) 56,500

Required:

1. Determine the price for the part using a markup of 35% of full manufacturing cost.

2. Determine the price for the part using a markup of 24% of full life-cycle cost.

3. Determine the price for the part using a desired gross margin percentage to sales of 45%.

4. Determine the price for the part using a desired life-cycle cost margin percentage to sales of 29%.

5. Determine the price for the part using a desired before-tax return on investment of 12%.

6. Determine the total contribution margin and total operating profit for each of the methods in requirements 1 through 5

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

the detailed answer for the above question is explained below

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known...
Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams...
super Center produces a part (product A) that is used in the manufacture of one of...
super Center produces a part (product A) that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 12,000 units, are as follows: Direct materials $35.00 Direct labour $12.00 Variable manufacturing overhead $7.00 Fixed manufacturing overhead $6.00 Total cost $60.00 The fixed overhead costs are unavoidable. Assume Home Center can purchase 12,000 units of the part (product A ) from Tech Company for $56.00 each, and the facilities...
Product Cost Method of Product Pricing La Femme Accessories Inc. produces women's handbags. The cost of...
Product Cost Method of Product Pricing La Femme Accessories Inc. produces women's handbags. The cost of producing 1,300 handbags is as follows: Direct materials $14,800 Direct labor 7,000 Factory overhead 6,200 Total manufacturing cost $28,000 The selling and administrative expenses are $28,000. The management desires a profit equal to 15% of invested assets of $504,000. If required, round your answers to nearest whole number. a. Determine the amount of desired profit from the production and sale of 1,300 handbags. $...
Smart Stream Inc. uses the product cost method of applying the cost-plus approach to product pricing....
Smart Stream Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $150 Factory overhead $350,000 Direct labor 25 Selling and administrative expenses 140,000 Factory overhead 40 Selling and administrative expenses 25 Total variable cost per unit $240 Smart Stream desires a profit equal to a 30% return on invested assets of $1,200,000. a. Determine the...
Martin Company is considering the introduction of a new product. To determine a selling price, the...
Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of Units to be produced and sold each Year: 15,500 Unit Product Cost $35 Projected Annual selling and administrative expenses $72,000 Estimated Investment required by the company $470,000 Desired Return on Investment (ROI) 19% The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the desired ROI. (Round your...
National Corporation needs to set a target price for its newly designed product M14–M16. The following...
National Corporation needs to set a target price for its newly designed product M14–M16. The following data relate to this new product. Per Unit Total Direct materials $27 Direct labor $38 Variable manufacturing overhead $11 Fixed manufacturing overhead $1,440,000 Variable selling and administrative expenses $ 4 Fixed selling and administrative expenses $ 960,000 These costs are based on a budgeted volume of 80,000 units produced and sold each year. National uses cost-plus pricing methods to set its target selling price....
Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The...
Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Variable costs:      Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total 8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500. a. Determine the amount of desired...
Product Cost Concept of Product Pricing Willis Products Inc. uses the product cost concept of applying...
Product Cost Concept of Product Pricing Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 3,000 units of medical tablets are as follows: Variable costs per unit: Fixed costs: Direct materials $114 Factory overhead $120,000 Direct labor 42 Selling and admin. exp. 39,000 Factory overhead 35 Selling and admin. exp. 29 Total $220 Willis Products desires a profit equal to a 20% rate of return on invested...
Product Cost Concept of Product Pricing Willis Products Inc. uses the product cost concept of applying...
Product Cost Concept of Product Pricing Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 3,000 units of medical tablets are as follows: Variable costs per unit: Fixed costs: Direct materials $114 Factory overhead $120,000 Direct labor 42 Selling and admin. exp. 39,000 Factory overhead 35 Selling and admin. exp. 29 Total $220 Willis Products desires a profit equal to a 20% rate of return on invested...
Part 4 USB Inc. predicted 2018 variable and fixed costs are as follows: Company budgeted for:...
Part 4 USB Inc. predicted 2018 variable and fixed costs are as follows: Company budgeted for: 43,200 Units Variable costs Fixed costs Manufacturing 734,400 172,800 Selling and Administrative 216,000 60,500 Total 950,400 233,300 USB Inc. produces a wide variety of computer interface devices. Per unit manufacturing cost information about one of these products, a high-capacity flash drive is as follows: Direct material $6 Direct labor 8 Variable Manufacturing Overhead 3 Fixed Manufacturing Overhead -allocated per unit 4 Total manufacturing costs...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT