Question

The following Information is available on Bruder Inc.'s Product A: Number of units sold each year Selling price per unit Unit product cost Investment in Product A Required return on investment 23,000 $ 70 $ 40 $530,000 11% The company uses the absorption costing approach to cost-plus pricing described in the text. Based on these data, the total selling and administrative expenses each year are: (Round your intermediate calculations to 2 decimal places.) Multiple Choice O $690,000 $631,700 $283,000 $390,000

Answer 1

			Workings:
1)	Sales	$ 1,610,000.00	(23000 x $ 70)
	COGS	$   (920,000.00)	(23000 x $ 40)
	GP	$    690,000.00
	S&A	$    631,700.00	($ 690000 - $ 58300)
	Profit	$      58,300.00	($ 530000 x 11%)

2)

		Workings:
Sales	$ 6,502,220.00	(GP + COGS)
COGS	$ (4,549,300.00)	(97000 x $ 46.9)
GP	$ 1,952,920.00	(Profit + S&A)
S&A	$ (1,914,000.00)
Profit	$        38,920.00	($ 278000 x 14%)

Mark Up	=	(Sales - COGS) / COGS
	=	($ 6502220 - $ 4549300) / $ 4549300
	=	42.9%

3)

Sales	$ 1,424,940.00	(GP + COGS)
COGS	$ (1,122,000.00)	(34000 x $ 33)
GP	$     302,940.00	(Profit + S&A)
S&A	$    (243,540.00)
Profit	$        59,400.00	($ 540000 x 11%)

Mark Up	=	(Sales - COGS) / COGS
	=	($ 1424940 - $ 1122000) / $ 1122000
	=	27%

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