91Ó°ÊÓ

Vanderhoff Construction Company is considering selling excess machinery with a book value of \(\$ 260,000\) (original cost of \(\$ 380,000\) less accumulated depreciation of \(\$ 120,000\) ) for \(\$ 210,000\), less a \(4 \%\) brokerage commission. Alternatively, the machinery can be leased for a total of \(\$ 240,000\) for five years, after which it is expected to have no residual value. During the period of the lease, Vanderhoff Construction Company's costs of repairs, insurance, and property tax expenses are expected to be \(\$ 28,000\). a. Prepare a differential analysis report, dated January 3, 2008, for the lease or sell decision. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be \(\$ 34,000\). Assume further that the Camry's total manufacturing cost for the upcoming model year is estimated to be \(\$ 28,500\) and that Toyota requires a \(20 \%\) profit margin on selling price (which is equivalent to a \(25 \%\) markup on product cost). a. What price will Toyota establish for the Camry for the upcoming model year? b. I__ What impact will target costing have on Toyota, given the assumed information?