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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: Per Unit Total Direct materials $7 Direct labor $5 Variable manufacturing overhead $ 2 Fixed manufacturing overhead $ 116,000 Variable selling and administrative expenses $ 1 Fixed selling and administrative expenses $50,000 Required: What is the unit product cost for the new product? Note: Round intermediate calculations and final answer to 2 decimal places. What is the markup percentage on absorption cost for the new product? Note: Round intermediate calculations to 2 decimal places. What selling price would the company establish for its new product using a markup percentage on absorption cost? Note: 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: Per Unit Total Direct materials $7 Direct labor $5 Variable manufacturing overhead $ 2 Fixed manufacturing overhead $ 116,000 Variable selling and administrative expenses $ 1 Fixed selling and administrative expenses $50,000 Required: What is the unit product cost for the new product? Note: Round intermediate calculations and final answer to 2 decimal places. What is the markup percentage on absorption cost for the new product? Note: Round intermediate calculations to 2 decimal places. What selling price would the company establish for its new product using a markup percentage on absorption cost? Note: Round intermediate calculations and final answer to 2 decimal places.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Per Unit Total Direct materials $7 Direct labor $5 Variable manufacturing overhead $ 2 Fixed manufacturing overhead $ 116,000 Variable selling and administrative expenses $ 1 Fixed selling and administrative expenses $ 50,000 Required: What is the unit product cost for the new product? Note: Round intermediate calculations and final answer to 2 decimal places. What is the markup percentage on absorption cost for the new product? Note: Round intermediate calculations to 2 decimal places. What selling price would the company establish for its new product using a markup percentage on absorption cost? Note: Round intermediate calculations and final answer to 2 decimal places.
Transcribed Image Text: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: Per Unit Total Direct materials $7 Direct labor $5 Variable manufacturing overhead $ 2 Fixed manufacturing overhead $ 116,000 Variable selling and administrative expenses $ 1 Fixed selling and administrative expenses $ 50,000 Required: What is the unit product cost for the new product? Note: Round intermediate calculations and final answer to 2 decimal places. What is the markup percentage on absorption cost for the new product? Note: Round intermediate calculations to 2 decimal places. What selling price would the company establish for its new product using a markup percentage on absorption cost? Note: Round intermediate calculations and final answer to 2 decimal places.
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