Claxon Company owns a machine with a cost of $305,000 and accumulated depreciation of$65,000 that can be sold for $262,000$, less a 5% sales commission. Alternatively, the machine can be leased by Claxon Company for three years for a total of $272,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Claxon Company on the machine would total$21,600 over the three years. Prepare a differential analysis on January 12 as to whether Claxon Company should lease (Alternative 1) or sell (Alternative 2) the machine.

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be$22,500 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). b. What impact will target costing have on Toyota, given the assumed information?

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be$22,500 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Toyota establish for the Camry for the upcoming model year?

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:

$$\begin{array}{ll} \text{Variable costs:}\\ \text{Direct materials}&\text{\$\hspace{5pt}150 per unit}\\ \text{Direct labor}&{\hspace{15pt}25}\\ \text{Factory overhead}&{\hspace{15pt}40}\\ \text{Selling and admin. exp.}&\underline{\hspace{15pt}25}\\ \text{Total }&\underline{\underline{\text{\$\hspace{5pt}240}}}\text{ per unit}\\ \end{array}$$

$$\begin{array}{lr} \text{Fixed costs:}\\ \text{Factory overhead}&{\$\hspace{15pt}350,000}\\ \text{Selling and admin. exp.}&{\hspace{25pt}140,000}\\ \end{array}$$

Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.

d. Determine the selling price of cellular phones.

Michigan Company sells 10,000 units at $100 per unit. Variable costs are$75 per unit, and fixed costs are $125,000. Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

Which of the following is in accordance with generally accepted accounting principles?

A. Accrual-basis accounting

B. Cash-basis accounting

C. Both accrual-basis and cash-basis accounting

D. Neither accrual-basis nor cash-basis accounting

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:

$$\begin{array}{ll} \text{Variable costs:}\\ \text{Direct materials}&\text{\$\hspace{5pt}150 per unit}\\ \text{Direct labor}&{\hspace{15pt}25}\\ \text{Factory overhead}&{\hspace{15pt}40}\\ \text{Selling and admin. exp.}&\underline{\hspace{15pt}25}\\ \text{Total }&\underline{\underline{\text{\$\hspace{5pt}240}}}\text{ per unit}\\ \end{array}$$

$$\begin{array}{lr} \text{Fixed costs:}\\ \text{Factory overhead}&{\$\hspace{15pt}350,000}\\ \text{Selling and admin. exp.}&{\hspace{25pt}140,000}\\ \end{array}$$

Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.

c. Determine the product cost markup percentage for cellular phones.

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:

$$\begin{array}{ll} \text{Variable costs:}\\ \text{Direct materials}&\text{\$\hspace{5pt}150 per unit}\\ \text{Direct labor}&{\hspace{15pt}25}\\ \text{Factory overhead}&{\hspace{15pt}40}\\ \text{Selling and admin. exp.}&\underline{\hspace{15pt}25}\\ \text{Total }&\underline{\underline{\text{\$\hspace{5pt}240}}}\text{ per unit}\\ \end{array}$$

$$\begin{array}{lr} \text{Fixed costs:}\\ \text{Factory overhead}&{\$\hspace{15pt}350,000}\\ \text{Selling and admin. exp.}&{\hspace{25pt}140,000}\\ \end{array}$$

Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.

b. Determine the product cost and the cost amount per unit for the production of 10,000 cellular phones.

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:

$$\begin{array}{ll} \text{Variable costs:}\\ \text{Direct materials}&\text{\$\hspace{5pt}150 per unit}\\ \text{Direct labor}&{\hspace{15pt}25}\\ \text{Factory overhead}&{\hspace{15pt}40}\\ \text{Selling and admin. exp.}&\underline{\hspace{15pt}25}\\ \text{Total }&\underline{\underline{\text{\$\hspace{5pt}240}}}\text{ per unit}\\ \end{array}$$

$$\begin{array}{lr} \text{Fixed costs:}\\ \text{Factory overhead}&{\$\hspace{15pt}350,000}\\ \text{Selling and admin. exp.}&{\hspace{25pt}140,000}\\ \end{array}$$

Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.

a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones.

La Femme Accessories Inc. produces women's handbags. The cost of producing 800 handbags is as follows:

$$\begin{array}{lr} \text{Direct materials}& \$18,000\\ \text{Direct labor} &8,500\\ \text{Factory overhead}&\underline{\$180,000}\\ \text{Total manufacturing cost}&\underline{ \$32,000}\\ \end{array}$$

d. Determine the selling price of handbags.

La Femme Accessories Inc. produces women's handbags. The cost of producing 800 handbags is as follows:

$$\begin{array}{lr} \text{Direct materials}& \$18,000\\ \text{Direct labor} &8,500\\ \text{Factory overhead}&\underline{\$180,000}\\ \text{Total manufacturing cost}&\underline{ \$32,000}\\ \end{array}$$

c. Determine the product cost markup percentage for handbags.

La Femme Accessories Inc. produces women's handbags. The cost of producing 800 handbags is as follows:

$$\begin{array}{lr} \text { Direct materials } & \$ 18,000 \\ \text { Direct labor } & 8,500 \\ \text { Factory overhead } & \underline {5,500} \\ \text { Total manufacturing cost } & \underline{\$ 32,000 } \\ \end{array}$$

The selling and administrative expenses are $17,000. The management desires a profit equal to 22% of invested assets of$250,000. b. Determine the product cost per unit for the production of 800 handbags.

La Femme Accessories Inc. produces women's handbags. The cost of producing 800 handbags is as follows:

$$\begin{array}{lr} \text { Direct materials } & \$ 18,000 \\ \text { Direct labor } & 8,500 \\ \text { Factory overhead } & \underline {5,500} \\ \text { Total manufacturing cost } & \underline{\$ 32,000 } \\ \end{array}$$

The selling and administrative expenses are $17,000. The management desires a profit equal to 22% of invested assets of$250,000. a. Determine the amount of desired profit from the production and sale of 800 handbags.

Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays, and leisure customers during the weekend. However, the leisure customers on weekends occupy fewer rooms than do business customers on weekdays. Thus, Cityscape plans to provide special weekend pricing to attract additional leisure customers. A hotel room is priced at $180 per room night. The cost of a hotel room night includes the following:

$$\begin{array}{lr} & \begin{array}{c} \textbf { Cost Per Room Night } \\ \textbf { (at normal occupancy) } \end{array} \\ \hline \text { Housekeeping service } & \$ 23 \\ \text { Utilities } & 7 \\ \text { Amenities } & 3 \\ \text { Hotel depreciation } & 55 \\ \text { Hotel staff (excluding housekeeping) } &\underline{ 42 }\\ \text { Total } & \underline{\$ 130} \\ \end{array}$$

b. What should be considered in setting a discount price for the weekends?