a companyrsquos sales volume averages 4000 units


A company’s sales volume averages 4,000 units per year. 
Recently, its main competitor reduced the price of its product to $48. 
The company expects sales to drop dramatically unless it matches the competitor's price. 

In addition, the current profit per unit must be maintained. 
Information about the product (for production of 4,000) is as follows. 

Standard Quantity Actual Quantity Actual Cost 
Materials (pounds) 5,800 6,000 $60,000 
Labor (hours) 1,800 2,000 $20,000 
Setups (hours) 0 225 $8,000 
Material handling (moves) 0 400 $5,000 
Warranties (number repaired) 0 300 $15,000 


Required 
a. Calculate the target cost for maintaining current market share and profitability. 
b. Calculate the non-value-added cost per unit. 
c. If non-value-added costs can be reduced to zero, can the target cost be achieved?

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Accounting Basics: a companyrsquos sales volume averages 4000 units
Reference No:- TGS0411291

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