Bonita Products desires to set a target price for its newest product. Information for a budgeted volume of 8,000 units is shown below. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $ 146 $ $ 71 96 $ 45 Total $ 50,000 $ 70,000 Bonita Products uses cost-plus pricing and management wants a 25% ROI on the new product. Assets of $1,400,000 are committed to production of the new product.
Bonita Products desires to set a target price for its newest product. Information for a budgeted volume of 8,000 units is shown below. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $ 146 $ $ 71 96 $ 45 Total $ 50,000 $ 70,000 Bonita Products uses cost-plus pricing and management wants a 25% ROI on the new product. Assets of $1,400,000 are committed to production of the new product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bonita Products desires to set a target price for its newest product. Information for a budgeted volume of 8,000 units is shown below.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
Per Unit
$ 146
$
96
$ 71
$ 45
Total
$ 50,000
$70,000
Bonita Products uses cost-plus pricing and management wants a 25% ROI on the new product. Assets of $1,400,000 are committed to
production of the new product.
Transcribed Image Text:Compute the markup percentage under absorption-costing that will allow Bonita Products its desired ROI. (Round answer to 2
decimal places, e.g. 10.50%.)
Markup percentage
(d)
Target price
Compute the target price of the new product under absorption-costing. (Round answer to 2 decimal places, e.g. 10.50.)
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