# Investment and Selling Price

Topics: Investment, Price, Rate of return Pages: 3 (588 words) Published: October 12, 2012
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...