Utah Utensil has developed a new kitchen utensil

Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product:

Year Expected Volume Expected Price per Unit
1 48,000 units $19
2 48,000 units 20
3 90,000 units 16
4 40,000 units 12

If the firm desires to net $3.50 per unit in profit over the life of the product, and selling and administrative expenses are expected to average $50,000 per year, what is the target cost to produce the new utensil?


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Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil

Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil. In 2010, Moon Company purchased 12,000 premiums at $1.00 each and sold 360,000 boxes of soap powder @ $4.00 per box. Based on past experience, it is estimated that 60% of the coupons will be redeemed. During 2010, 96,000 coupons were presented for redemption.

During 2011, 19,000 premiums were purchased at $1.10. The company sold 800,000 boxes of soap at $4.00 and 330,000 coupons were presented for redemption.

Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in both 2010 and 2011. Assume a FIFO inventory flow.


Click here for the solution: Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil