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Cilia Corporation specializes in the production of door knobs,which are mostly sold within its territory.The selling price for each door knob is $15.Using the traditional allocation method to allocate manufacturing overhead,the full-product cost is determined to be $10.The company recently introduced the activity-based costing method to allocate its overhead.The refinement of costs shows that the full-product cost is $2.50 lower with activity-based costing than with traditional costing.
Requirement:
1.Calculate the change in net profit percentage as a result of the introduction of activity-based costing.
2.The desired net profit margin of the company is 60%.If the production costs cannot be reduced,by how much should the selling price be increased in order to achieve the desired profit? (Use the cost estimates under activity-based costing. )
Negative Characteristics
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The collaborative effort of a group to achieve a common goal or to complete a task in the most effective and efficient way.
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