Investment and Selling Price

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ACC4201 TARGET COSTING

27. Straus Company, a manufacturer of electronic products, wants to introduce a new calculator. To compete effectively, the calculator could not be priced at more than $40. The company requires a 20% rate of return on investment on all new products. In order to produce and sell 30,000 calculators each year, the company would have to make an investment of $850,000. The target cost per calculator would be:  A. $16.50

B. $23.50
C. $28.33
D. $34.33
29. Hostetter Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $30 per unit, management projects sales of 30,000 units. The new product would require an investment of $200,000. The desired return on investment is 13%. The target cost per unit is closest to:  A. $32.92

B. $30.00
C. $33.90
D. $29.13
 Hauber Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $26 per unit, management projects sales of 60,000 units. The new product would require an investment of $300,000. The desired return on investment is 20%.  

47. The desired profit according to the target costing calculations is:  A. $312,000
B. $60,000
C. $1,560,000
D. $1,500,000

48. The target cost per unit is closest to: 
A. $26.00
B. $31.20
C. $30.00
D. $25.00

 59. Turnhilm, Inc. is considering adding a small electric mower to its product line. Management believes that in order to be competitive, the mower cannot be priced above $139. The company requires a minimum return of 25% on its investments. Launching the new product would require an investment of $8,000,000. Sales are expected to be 40,000 units of the mower per year.

Required:

Compute the target cost of a mower. 
57. The management of Hettler Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the...
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