Purchase Solution

Cost Classification/Target Profit

Not what you're looking for?

Ask Custom Question

Bart's Wood Work Company

Assume that the company keeps no inventories. Below is information that pertains to Bart's Wood Work Company for the past year.

Based on this information prepare a financial accounting income statement (that is in the required GAAP for US external reporting).

From this information make appropriate assumptions about cost behavior and assume that the direct labor costs vary directly with the number of units produced. How many units must the company sell in order to earn a pretax profit of $500,000.00?

Bart's Wood Work Company

Units produced and sold 50,000
Sales price per unit $70
Labor to make shelves 600,000
Wood to make shelves 450,000
sales staff salaries 80,000
Office and show room rental expense 150,000
Depreciation on carpentry equipment 50,000
Advertising 200,000
Sales Commissions based on units sold 180,000
Misc. fixed manufacturing over head (support) 150,000
Rent for the building where the shelves are made 300,000
Misc. variable manufacturing overhead (support) 350,000
Depreciation for office equipment 10,000

Purchase this Solution
Solution Summary

The solution explains how to classify costs as fixed and variable and then to calculate units to be sold to generate a target profit

Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Cost Equation/Account Classification Method

    129976 Cost Equation/Account Classification Method A. Develop the cost equation for Mr. Smith's store, using the account classification method, assuming that the cost object is the individual compact disc. b. Mr.

  • Cost Function Estimates for Bookkeeping Franchise Opportunity

    Profit equation and contribution margin Profit = Total revenue - Total costs but total cost = total variable cost + total fixed cost therefore profit = total revenue - Total variable cost - total fixed cost Contribution margin = total revenue

  • Walmart- product line classification, assortment, position

    489133 Walmart- product line classification, assortment, position What is walmarts product line classification?

  • Principles of Managerial Accounting

    Cost term concepts and classification: There are cost terms that are important these include the manufacturing costs which is also the product cost.

  • Activity based management and Cost management tools

    Target cost is the estimated long run cost of the product or service that enables the company to achieve its target profit. Target cost = Target price per unit - target profit per unit =$125-$25 =$100 2.What is the target profit?

  • Profit maximizing pricing

    You should say target costing helps determine the product's life cycle cost which is required to develop specified functionality and quality and at the same time gets the firm the target profit.

  • CVP Analysis : Calculating the royalty amount per bundle

    Sales Price (P)= $17.00 Target Profit Margin=12.00% Current Royalty (VR)= $3.50 Other Variable Cost (VO)= $9.00 Total Variable Cost (V)=$12.50 Annual Sales (Q)=117,000 Fixed Cost (F)= $325,000.00 Current profit = PxQ - VRxQ

  • Target costing methodology

    Given: The selling price per unit = $125.00 Required profit = 19% ; therefore, profit per unit = $23.75 Therefore, the target cost per unit is 125.00 - 23.75 = 101.25 Target cost per unit is equal to price per unit minus the required profit per

  • Managerial Accounting Review Questions

    Pentecost Corporation desires to earn target net income of $40,000.

View More Related Solutions