Dear student, please note that as HOMEWORKLIB's Honor Code an expert is allowed to answer 1 question per post OR 4 sub parts of a single question with various sub parts like this one. Please re-post for the rest. Hope this helps, if not please let know in comments. Please mark the answer as helpful for the efforts put, it will mean alot. Thanks
PART 1 | ||
Direct material | $ 12.00 | |
Direct labor | $ 8.00 | |
Var Mfg Overhead | $ 3.00 | |
Fixed Mfg Overhead | $ 5.00 | |
Total cost | $ 28.00 | |
PART 2 | ||
Required ROI | $ 130,000.00 | 650,000*.20% |
Variable selling overhead | $ 20,000.00 |
20000 UNITS X $ 1 |
Fixed selling overhead | $ 60,000.00 | |
Total | $ 210,000.00 | A |
Unit product cost | $ 28.00 | |
Sales in units | 20000 | |
Total product cost | $ 560,000.00 | B |
Mark up percentage = | 37.50% | A/B |
PART 3 | ||
Unit product cost | $ 28.00 | |
Mark up % | 50% | |
Selling price | $ 42.00 | |
PART 4 | ||
Sales | 798000 | |
COGS | 532000 | |
Gross profit | 266000 | |
Selling expense | 79000 | |
Net operating income | 187000 | |
ROI | 28.77% | |
PROBLEM 12A-12 Absorption Costing Approach to Cost-Plus Pricing: Customer Latitude and Pricing L012-8, L012-9 Messina Company...
Messina Company wants to use absorption cost-plus pricing to establish the selling price for a new product. The company plans to invest $650,000 in operating assets that provide the capacity to make 30,000 units. Its required return on investment (ROI) in its operating assets is 20%. Messina’s Accounting Department set a goal of producing and selling 20,000 units during the new product’s first year of availability. It also provided the following cost estimates for the new product: Per UnitTotalDirect materials$12Direct labor$8Variable...
Messina Company wants to use absorption cost-plus pricing to establish the selling price for a new product. The company plans to invest $650,000 in operating assets that provide the capacity to make 30,000 units. Its required return on investment (ROI) in its operating assets is 20%. Messina’s Accounting Department set a goal of producing and selling 20,000 units during the new product’s first year of availability. It also provided the following cost estimates for the new product: Per UnitTotalDirect materials$12Direct labor$8Variable...
EXERCISE 12A-6 Value-Based Pricing; Absorption Costing Approach to Cost-Plus Pricing L012-8, L012–10 Valmont Company has developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200—absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $8,400. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing...
Currington Company wants to use absorption cost-plus pricing to set the selling price on a newly remodeled product. The company plans to invest $158,000 in operating assets to produce and sell 12,000 units. Its required return on investment (ROI) in its operating assets is 16%. The accounting department has provided cost estimates for the new product as follows: Per Unit Total Direct materials $ 4.40 Direct labor $ 3.40 Variable manufacturing overhead $ 1.40 Fixed manufacturing overhead $ 70,800 Variable...
Magney, Inc., uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 38,000 units next year, the unit product cost of a particular product is $61.50. The company's selling and administrative expenses for this product are budgeted to be $814,000 in total for the year. The company has invested $440,000 in this product and expects a return on investment of 11%. The selling price for this product...
Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $230,000 in operating assets to produce and sell 23,000 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: Per Unit Total Direct materials $ 8.40 Direct labor $ 6.40 Variable manufacturing overhead $ 3.40 Fixed manufacturing overhead $ 182,850 Variable...
Appendix 12A) Lacy Corporation uses the absorption costing approach to cost-plus pricing to set prices for its products. Based on budgeted sales of 86,000 units next year, the unit product cost of a particular product is $81.60. The company's selling, general, and administrative expenses for this product are budgeted to be $1,247,000 in total for the year. The company has invested $360,000 in this product and expects a return on investment of 12%. The markup on absorption cost for this...
Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $290,000 in operating assets to produce and sell 29,000 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: Per Unit Total Direct materials $ 9.00 Direct labor $ 7.00 Variable manufacturing overhead $ 4.00 Fixed manufacturing overhead $ 239,250 Variable...
Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $220,000 in operating assets to produce and sell 22,000 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: Per Unit Total Direct materials $ 8.30 Direct labor $ 6.30 Variable manufacturing overhead $ 3.30 Fixed manufacturing overhead $ 173,800 Variable...
Aldean Company wants to use absorption cost-plus pricing to set the selling price ona new product. The company plans to invest $250,000 in operating assets to produce and sell 25,000 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: Per Unit Total Direct materials $8.60 $6.60 $3.60 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling...