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Compute the markup percentage under absorption-cost pricing that will allow Blue Spruce Windows to realize its desired ROI. Markup Percentage %

Compute the markup percentage under absorption-cost pricing that will allow Blue Spruce Windows to realize its desired ROI. Markup Percentage %

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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Blue Spruce Windows Inc. is in the process of setting a target price on its newly designed tinted window. Cost data relating to the window at a budgeted volume of 5,040 units are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses (a) Per Unit $ 110 $ 70 $ 10 Markup Percentage $ 10 Total Blue Spruce Windows uses cost-plus pricing methods that are designed to provide the company with a 25% ROI on its tinted window line. A total of $1,280,160 in assets is committed to production of the new tinted window. $ 151,200 % $ 128,520 Compute the markup percentage under absorption-cost pricing that will allow Blue Spruce Windows to realize its desired ROI.
Transcribed Image Text:Blue Spruce Windows Inc. is in the process of setting a target price on its newly designed tinted window. Cost data relating to the window at a budgeted volume of 5,040 units are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses (a) Per Unit $ 110 $ 70 $ 10 Markup Percentage $ 10 Total Blue Spruce Windows uses cost-plus pricing methods that are designed to provide the company with a 25% ROI on its tinted window line. A total of $1,280,160 in assets is committed to production of the new tinted window. $ 151,200 % $ 128,520 Compute the markup percentage under absorption-cost pricing that will allow Blue Spruce Windows to realize its desired ROI.
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