Respuesta :
The question is incomplete. The complete question is :
Kallapur company manufactures two products: KAP1, which sells for $120; and QUIN, which sells for $220. estimated cost and production data for the current year are as follows :
KAP1 QUIN
Direct materials cost $ 30 $ 45
Direct labor cost (at rate $ 12/hr) $ 24 $ 60
Estimated production (units) 25,000 15,000
In addition, fixed manufacturing overhead is estimated to be $ 2,000,000 and variable overhead is estimated to equal $ 3 per direct labor hour. Kallapur desires a 15 percent return on sales for all of its products.
Calculate the target cost for both KAP1 and QUIN.
Solution :
It is given that Kallapur company manufactures two products namely KAP1 and QUIN.
Selling cost of KAP1 = $ 120
Selling cost of QUIN = $ 220
∴ [tex]$\text{Target cost = target price - target profit}$[/tex]
Target cost of KAP1
Target price = $ 120
Target profit = $ 120 x 0.15
= $ 18
So, [tex]$\text{target cost = target price - target profit}$[/tex]
= 120 - 18
= $ 102
Target cost of QUIN
Target price = $ 220
Target profit = $ 220 x 0.15
= $ 33
So, [tex]$\text{target cost = target price - target profit}$[/tex]
= 220 - 33
= $ 187
