Nance Corporation is about to introduce a new product.The following costs would be incurred if 48,000 units
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Nance Corporation is about to introduce a new product. The following costs would be incurred if 48,000 units are produced and sold each year:
Per unit | Total | |||||
Variable production costs | ps | 12 | ps | 576,000 | ||
Fixed production costs | ps | 8 | ps | 384.000 | ||
Variable selling and administrative costs | ps | 4 | ps | 192,000 | ||
Fixed selling and administrative costs | ps | 6 | ps | 288,000 | ||
Nance Corporation uses the absorption costing method for cost-plus pricing, as described in the text.
Suppose the company has not yet determined a markup to use on the new product. The new product would require an investment of $1,100,000. The company requires a 20% rate of return on investment on all new products. The profit margin under the absorption cost approach would be closest to ?
Related Book For
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
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