Answer the Following Questions Using the Information Below

question 74

Multiple Choice

Answer the following questions using the information below:
After conducting a market research study, Harry Products decided to produce an electric coffee pot to complement its line of kitchen products. It is estimated that the new coffee pot can be sold at a target price of $23. The annual target sales volume for the coffee pot is 300,000. Potter has target operating income of 18% of sales.
-What is the total target cost?

• A)$1,242,000
• B)$5,658,000
• C)$6,900,000
• D)$500,000

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Definitions:

Variable Overhead

Costs that vary with production volume but are not directly tied to specific production units, such as utilities for the manufacturing plant.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process or providing a service, used in costing and operational efficiency analyses.

Direct Material

Primary raw materials directly incorporated into a finished product, an essential component in calculating the cost of goods sold.

Work in Process

Inventory that includes partially finished goods which are still in the production process.