Chp 8 additional solutions - EXERCISE 8-3 (a) (1) In this...

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EXERCISE 8-3 (a) (1) In this case the selling price would be $125 ($100 + [$100 X 25%]). The problem with the $125 is that it is unlikely that Mucky Duck will be able to sell any All-Body suits at that price. Market research seems to indicate that it will sell for only $110. (2) One way that Mucky Duck might consider manufacturing the All-Body swimsuit is if it has excess capacity and therefore manufacturing the All-Body will not affect fixed costs. Thus if the company can cover its variable costs it might want to sell at the $110 level. (b) In this case the amount would be the selling price of $110. (c) The highest acceptable cost would be the target cost. The target cost is $85 as shown below: Target cost = Market price Desired profit $85 = $110 $25 EXERCISE 8-6 (a) Total cost per session: Per Session Direct materials $ 20 Direct labor 400 Variable overhead 50 Fixed overhead ($950,000 ÷ 1,000) 950 40
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This note was uploaded on 03/30/2008 for the course ACCOUNTING 281 taught by Professor English during the Spring '08 term at Edgewood College-Madison.

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Chp 8 additional solutions - EXERCISE 8-3 (a) (1) In this...

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