A Custom Kitchen Cabinet Storeowner Wishes to Use Target Profit

question 124

Multiple Choice

A custom kitchen cabinet storeowner wishes to use target profit pricing to establish a price for a typical section of cabinets.Assume variable cost is $200 per unit,fixed cost is $44,000,and a target profit of $10,000 on a volume of 400 cabinets is desired.What should be charged for a typical cabinet section?

• A)$335.00
• B)$310.00
• C)$455.00
• D)$398.00

Recognize the accounting treatment for changes in depreciation estimates and method changes.

Evaluate the reasoning behind asset depreciation and the non-recognition of fair value changes during asset lifetime.

Apply the straight-line method of depreciation and comprehend its effects on financial statements.

Comprehend the effects of asset revision in useful life and salvage value on depreciation calculations.

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Definitions:

Solenoid Coil

An electromagnetic coil used to convert electrical energy into linear motion, often used in valves or as actuating mechanisms.

Operating Variables

Factors that can be adjusted or varied during the operation of a machine, system, or process, affecting its performance or outcome.

Fast Adaptive Mode

High-speed processing algorithms; Allison uses this term to describe an operating condition in which large changes are made to initial shift conditions to adjust for major system tolerances such as solenoid-to-solenoid, main pressure, and clutch-to-clutch variations. A new or newly rebuilt transmission should be programmed to operate in fast adaptive mode.

Close-ratio Gearing

A transmission design where the gear ratios are closer together, allowing the engine to operate more consistently near its optimal RPM for performance.