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1. Why do prices at Orlando's theme parks remain high despite seasonal and economic cyclical ups and downs? What type of strategic pricing is used by these theme parks?
2. Target Costing MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufactur- ers such as Mercury and Honda purchase the components for use in large, powerful outboards. The part sells for $610, and sales volume averages 25,000 units per year. Recently, MaxiDrive's major competitor reduced the price of its equivalent unit to $550. The market is very competitive, and Maxi- Drive realizes it must meet the new price or lose significant market share. The controller has assem- bled these cost and usage data for the most recent year for MaxiDrive's production of 25,000 units:
Budgeted Quantity
Budgeted Cost
Actual Quantity
Actual Cost
Materials
$ 6,500,000
$ 7,000,000
Direct labor
2,500,000
2,625,000
Indirect labor
2,400,000
Inspection (hours and cost)
920
300,000
1,000
350,000
Materials handling (number of
$13,130,000
$13,715,000
purchases and cost)
3,500
500,000
3,450
485,000
Machine setups (number and cost)
1,400
750,000
1,500
725,000
Returns and rework (number of times and cost)
300
80,000
500
130,000
Required
1. Calculate the target cost for maintaining current market share and profitability.
2. Can the target cost be achieved? How?
as you have worked as a real estate agent for 10 years as well as are earning about 100000 every year with your current
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