MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $630, and sales volume averages 26,500 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $559. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 26,500 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) 980 Materials handling (number of purchases and cost) Machine setups (number and cost) 3,950 Budgeted Quantity Actual Budgeted Cost Quantity Actual Cost $ 6,650,000 $ 7,150,000 2,565,000 2,700,000 2,560,000 2,475,000 330,000 575,000 3,600 1,150 365,000 560,000 1,550 Returns and rework (number of times and cost) 330 825,000 95,000 1,650 800,000 530 145,000 $ 13,600,000 $ 14,195,000 Required: 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost
MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $630, and sales volume averages 26,500 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $559. The market is very competitive, and MaxiDrive realizes it must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most recent year for MaxiDrive's production of 26,500 units: Direct materials Direct labor Indirect labor Inspection (hours and cost) 980 Materials handling (number of purchases and cost) Machine setups (number and cost) 3,950 Budgeted Quantity Actual Budgeted Cost Quantity Actual Cost $ 6,650,000 $ 7,150,000 2,565,000 2,700,000 2,560,000 2,475,000 330,000 575,000 3,600 1,150 365,000 560,000 1,550 Returns and rework (number of times and cost) 330 825,000 95,000 1,650 800,000 530 145,000 $ 13,600,000 $ 14,195,000 Required: 1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Target cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Note:-
- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
Transcribed Image Text:MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered
outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in
large, powerful outboards. The part sells for $630, and sales volume averages 26,500 units per year. Recently, MaxiDrive's
major competitor reduced the price of its equivalent unit to $559. The market is very competitive, and MaxiDrive realizes it
must meet the new price or lose significant market share. Management has begun paying closer attention to costs and has
reconfirmed the current existing standard costs. The controller then assembled the following cost and usage data for the most
recent year for MaxiDrive's production of 26,500 units:
Direct materials
Direct labor
Indirect labor
Inspection (hours and cost)
980
Materials handling (number of purchases and cost)
Machine setups (number and cost)
3,950
Budgeted
Quantity
Actual
Budgeted Cost Quantity
Actual Cost
$ 6,650,000
$ 7,150,000
2,565,000
2,700,000
2,560,000
2,475,000
330,000
575,000 3,600
1,150
365,000
560,000
1,550
Returns and rework (number of times and cost)
330
825,000
95,000
1,650
800,000
530
145,000
$ 13,600,000
$ 14,195,000
Required:
1. Calculate the target cost for maintaining current market share and profitability. (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
Target cost
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education