Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new...
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Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $200,000 in operating assets to produce and sell 16,000 units. Its required return on investment (ROI) in its operating assets is 18%. The accounting department has provided cost estimates for the new product as shown below: Total Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $7 $5 $2 $ 1 $ 116,000 $ 50,000 Required: 1. What is the unit product cost for the new product? (Round intermediate calculations and final answer to 2 decimal places.) 2. What is the markup percentage on absorption cost for the new product? (Round intermediate calculations to 2 decimal places.) 3. What selling price would the company establish for its new product using a markup percentage on absorption cost? (Round intermediate calculations and final answer to 2 decimal places.) Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $200,000 in operating assets to produce and sell 16,000 units. Its required return on investment (ROI) in its operating assets is 18%. The accounting department has provided cost estimates for the new product as shown below: Total Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $7 $5 $2 $ 1 $ 116,000 $ 50,000 Required: 1. What is the unit product cost for the new product? (Round intermediate calculations and final answer to 2 decimal places.) 2. What is the markup percentage on absorption cost for the new product? (Round intermediate calculations to 2 decimal places.) 3. What selling price would the company establish for its new product using a markup percentage on absorption cost? (Round intermediate calculations and final answer to 2 decimal places.)
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Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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