DQ_CH13_part 2.docx

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ACC 307: Cost Accounting Discussion Questions Chapter 13 DQ 1: Road Warrior manufactures and sells a model of motorcycle, XR500. In 2011, it reported the following: Units produced and sold 1,500 Investment $8,400,000 Markup percentage on full cost 9% Rate of return on investment 18% Variable cost per unit $8,450 Requirements: a. What was Road Warrior’s operating income on XR500 in 2011? What was the full cost per unit? What was the selling price? What was the percentage markup on variable cost? b. Road Warrior is considering increasing the annual spending on advertising for the XR500 by $500,000. The company believes that the investment will translate into a 10% increase in unit sales. Should the investment be made? Show your calculations. c. Refer back to the original data. In 2012, Road Warrior believes that it will only be able to sell 1,400 units at the price calculated in requirement 1. Management has identified $125,000 in fixed cost that can be eliminated. If Road Warrior wants to maintain a 9% markup on full cost, what is the target variable cost per unit?
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern