Answered: How much should Theta sell each rack so…

Business

Accounting

How much should Theta sell each rack so it can have a product profit margin of 28%?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

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Theta Metalwork Inc. entered into an exclusive contact with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the lattter’s needs. The latter is negotiating for a fixed-price on demand ordering of the racks over five years. Theta gathered the following data shown. How much should Theta sell each rack so it can have a product profit margin of 28%?
Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed-price on- demand ordering of the racks over five years. Theta gathered the following data shown in the image. How much should Theta sell each rack so that it can have a product profit margin of 28%? FIXED COSTS Research and Design Manufacturing Distribution Year 1 Year 2 Year 3 Year 4 Year 5 TOTALS P 200,000 P 50,000 30,000 P P 230,000 50,000 50,000 50,000 50,000 20,000 250,000 100,000 20,000 20,000 20,000 20,000 20,000 25,000 Customer Service 80,000 50,000 30,000 30,000 210,000 25,000 25,000 375,000 P 175,000 P 125,000 P 125,000 P 115,000 P 915,000 25,000 Other incremental operating costs TOTALS 25,000 125,000 VARIABLE COSTS PER UNIT Manufacturing 500 P 450 P 450 P 450 P 450 Distribution 100 100 100 100 100 Customer Service 50 50 50 50…
Theta Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed-price on- demand ordering of the racks over five years. Theta gathered the following data shown in the image. How much should Theta sell each rack so that it can have a product profit margin of 28%? FIXED COSTS Year 1 Year 2 Year 3 Year 4 Year 5 ТОTALS Research and Design 200,000 P 30,000 P 230,000 Manufacturing 50,000 50,000 50,000 50,000 50,000 250,000 Distribution 20,000 20,000 20,000 20,000 20,000 100,000 Customer Service 80,000 50,000 30,000 30,000 20,000 210,000 Other incremental operating costs 25,000 175,000 P 25,000 25,000 25,000 25,000 125,000 ТОTALS 375,000 P 125,000 P 125,000 P 115,000 P 915,000 VARIABLE COSTS PER UNIT Manufacturing 500 P 450 450 P 450 P 450 Distribution 100 100 100 100 100 Customer Service 50 50 50 50…
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