The predicted 2017 costs for Beta Motors are as follows: Manufacturing Costs Sel

Question

The predicted 2017 costs for Beta Motors are as follows:

Manufacturing Costs

Selling & Administrative Costs

Variable

$200,000

Variable

$600,000

Fixed

440,000

Fixed

300,000

Average total assets for 2017 are predicted to be $7,000,000.

If the company desires a 10 percent rate of return on total assets, the markup percentage on total manufacturing costs for unassigned costs would be:

190.0 percent

192.5 percent

180.0 percent

250.0 percent

Foresight Company manufactures binoculars. The actual costs for 2016 and 2017 were as follows:

2016

2017

Direct materials:

Plastic case

$ 4.00

$ 3.80

Lens set

17.00

17.20

Direct labor

32.00

(1.6 hours)

30.00

(1.5 hours)

Indirect manufacturing costs:

Variable

8.00

7.10

Fixed

2.00

(50,000 units)

1.60

(60,000 units)

Beginning in 2017, Foresight implemented a continuous improvement program that required a first-year cost reduction target of a 5 percent reduction of the 2016 base.

Foresight's continuous improvement target for lens sets in 2017 was:

$16.15

$17.20

$16.00

$15.75

Manufacturing Costs

Selling & Administrative Costs

Explanation / Answer

Part 1 Answer is 250.00%

Part 2 Answer

=$17*(1-5%)

=$16.15

Average Total Asset 7000000 Return =10% 0f total Asset 700000 (Unassigned Cost+Return)/(Manufaturing Cost) (900000+700000)/640000 250.00%

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