ACC 560 MART Education Terms/acc560mart.com ACC 560 MART Education Terms/acc560mart.com | Page 30

(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.
E8-6
Alma's Recording Studio rents studio time to musicians in 2-hour
blocks. Each session includes the use of the studio facilities, a digital
recording of the performance, and a professional music
producer/mixer. Anticipated annual volume is 1,000 sessions. The
company has invested $2,352,000 in the studio and expects a return on
investment (ROI) of 20%. Budgeted costs for the coming year are as
follows.
a. Determine the total cost per session
b. Determine the desired ROI per session