GYG Corporation manufactures and sells wine racks for $120 each. In a recent accounting period, GYG incurred the following costs to produce 300 racks:
Direct material $ 4,095
Direct labour 5,175
Variable manufacturing overhead 4,335
Fixed manufacturing overhead 1,140
Variable nonmanufacturing costs 4,185
Fixed nonmanufacturing costs 1,260
Total $20,190
1)Total costs
2)Price per wine rack
3)Total profit
a)GYG's marketing research department has proposed developing a better quality rack, which would sell for a price of $120. Top management will accept the proposal provided the profit margin is 40%. Calculate the target cost per unit for the new wine racks.
b)Recent market research has suggested GYG should sell the existing wine racks for $100 each. Calculate the percentage decrease required for each cost category listed above, assuming a 40% profit margin and proportional cost reduction across categories.
c)Ignore the information in part (b). Suppose GYG anticipates that the quantity demanded for its current wine racks will increase by 40% in the coming year. Assume that operations remain within the relevant range. Calculate the following amounts assuming GYG uses a 70% mark-up on total cost (including per-unit fixed costs)to determine product prices:
d)Ignore the information in parts (b)and (c). Assume that GYG plans to increase the price of its current wine rack by 30% next year and expects a resultant 40% drop in unit sales. Use the appropriate natural logarithms below to calculate the indicated amounts.
ln (0.1)= -2.303 ln (0.6)= -0.511 ln (1.1)= 0.095
ln (0.3)= -1.204 ln (0.7)= -0.357 ln (1.3)= 0.262"

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The Answer of GYG Corporation manufactures and sells wine racks for $120 each. In a recent accounting period, GYG incurred the following costs to produce 300 racks:
Direct material $ 4,095
Direct labour 5,175
Variable manufacturing overhead 4,335
Fixed manufacturing overhead 1,140
Variable nonmanufacturing costs 4,185
Fixed nonmanufacturing costs 1,260
Total $20,190
1)Total costs
2)Price per wine rack
3)Total profit
a)GYG's marketing research department has proposed developing a better quality rack, which would sell for a price of $120. Top management will accept the proposal provided the profit margin is 40%. Calculate the target cost per unit for the new wine racks.
b)Recent market research has suggested GYG should sell the existing wine racks for $100 each. Calculate the percentage decrease required for each cost category listed above, assuming a 40% profit margin and proportional cost reduction across categories.
c)Ignore the information in part (b). Suppose GYG anticipates that the quantity demanded for its current wine racks will increase by 40% in the coming year. Assume that operations remain within the relevant range. Calculate the following amounts assuming GYG uses a 70% mark-up on total cost (including per-unit fixed costs)to determine product prices:
d)Ignore the information in parts (b)and (c). Assume that GYG plans to increase the price of its current wine rack by 30% next year and expects a resultant 40% drop in unit sales. Use the appropriate natural logarithms below to calculate the indicated amounts.
ln (0.1)= -2.303 ln (0.6)= -0.511 ln (1.1)= 0.095
ln (0.3)= -1.204 ln (0.7)= -0.357 ln (1.3)= 0.262"

GYG Corporation Manufactures and Sells Wine Racks for $120 Each