ACC 560 help A Guide to career/uophelp.com ACC 560 help A Guide to career/uophelp.com | Page 36

Instructions
1.
Determine if management made the correct decision to
not process the table cleaner further by doing the following.
1. Calculate the company's total weekly gross profit
assuming the table cleaner is not processed further.
2. Calculate the company's total weekly gross profit
assuming the table cleaner is processed further.
(2) Gross profit $186,000
3. Compare the resulting net incomes and comment on
management's decision.
2.
using incremental analysis, determine if the table
cleaner should be processed further.
E8-2
Eckert Company is involved in producing and selling high-end golf
equipment. The company has recently been involved in developing
various types of laser guns to measure yardages on the golf course. One
small laser gun, called Little Laser, appears to have a very large
potential market. Because of competition, Eckert does not believe that it
can charge more than $90 for Little Laser. At this price, Eckert believes
it can sell 100,000 of these laser guns. Eckert will require an investment
of $8,000,000 to manufacture, and the company wants an ROI of 20%.
Instructions
a. Determine the target cost for one Little Laser.