CPA MA Exam With Confidence Using Practice Dumps

Which of the following comments about sales price is correct?

Quastir Co manufactures a single product which sells for $48.80 per unit. At this selling price, theprofitper unit is $5.35, after apportionment of the $65,000 of fixed costs. The budgeted production and sales volume is 20,000 units.

What is the margin of safety, expressed in units (to the nearest unit)?

Hera Co is developing a new product using a target costing approach. The initial assumption was that a sales volume of 200,000 units could be achieved at a selling price of $25 per unit.

However, market research indicates that to achieve the sales volume of 200,000 units, the selling price should be $23·50.

Hera wishes to obtain an average profit margin of 20% on sales.

The following data have been estimated for the product:

Direct material$10·45 per unit

Hourly production volume20 units

Directlaborcost$64 per hour

Variable overheads$82 per hour (absorbed on a directlaborhour basis)

Fixed costs to produce 200,000 units are estimated to be $680,000.

What reduction in the cost per unit is required in order to achieve the target cost per unit?