Target operating income capital invested return on

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target operating income / capital invested = return on investment 3,027,000 20,000,000 15.14% is operating income increases without increasing invested capital higher exceeds
R & J mechanical sells and services plumbing, heating, and air conditioning systems. R & J's cost accounting system tracks two cost categories direct labor marked up 100% direct materials marked up 60% labor materials repair option 6 110 replace option 3 230 labor rate 35 labor materials total cost repari option 210 110 320 replace option 105 230 335 labor costs * (1+ markup %) = labor price repair option 210 200% 420 replace option 105 200% 210 material cost * (1+ markup %) = material price repair option 110 160% 176 replace option 230 160% 368 labor materials total cost repari option 420 176 596 replace option 210 368 578 replace offer burke with only the repair option present burke with both options, and let her choose price - cost = profit repair option 596 320 276 replace option 578 335 243
new york temps, a large labor contractor, supplies contract labor to building construction companies for 2012 new york temps budgeted to supply 88,000 price per hour demand (hours) variable costs are 8 13 121,000 fixed costs are 352,000 15 108,000 pricing labor at full cost plus 10% 17 88,000 18 79,000 20 60,000 full cost per hour * (100% + markup percentage) = price per hour 12 110% 13.20 price per hour contrubution margin per hour * demand hours = total contribution 13 5 121,000 605,000 15 7 108,000 756,000 17 9 88,000 792,000 18 10 79,000 790,000 20 12 60,000 720,000 the price per hour that shold be charged is highest total contribution two different should consider should consider used as a starting point. Then it is modified based onmarket considerations the more balanced approach
quick test laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the company's early growth was attributable to government contracts this hourly rate is marked up 45% billing rates at a 45% labor and supervision 437,000 setup and facility costs 281,380 utilities 260,400 total budgeted costs for the period 1,288,000 budgets 115,000 setup and facility costs 550 cost driver for utilities 7,000 testing hours 70% setup hours 25% machine hour half 50% req 4 charge 15 total budgeted costs / number of hours = cost per test hour 1,288,000 115,000 11.20 cost per test hour * markup ratio = billing rate 11 1.45 16.24 operating cost / quantity of cost driver = rate labor and supervision 437,000 115,000 3.80 setup and facility costs 281,380 550 511.60 utilities 260,400 7,000 37.20 total activity cost * Htt percentage of total = HTT cost labor and supervision 437,000 70% 305,900 setup and facility costs 281,380 25% 70,345 utilities 260,400 50% 130,200 HTT ACT labor and supervision 305,900 131,100 setup and facility cost 70,345 211,035 utilities 130,200 130,200 total cost 506,445 472,335 number of testing hours 80,500 34,500 cost per testing hour 6.29 13.69 markup 1.45 1.45 billing rate per testing hour 9.12 19.85 the billing rates based on the activity based cost structure these billing rates be more efficient in arctic testing (ACT) 45% can be redesigned to achieve cost savings total activity cost * act percentage of total = act cost labor and supervision 437,000 30% 131,100 setup and facility costs 281,380 75% 211,035 utilities 260,400 50% 130,200
rejuv metal recycling and salvage has just been given the opportunity to salvage scrap metal and other materials fixed variable month 1 24 metal extraction and processing 4,000 100 month 1

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