Eckert Company uses the absorption costing approach to cost-plus pricing to set prices for its products. The following information will be used for questions 11 and 12 Based on budgeted sales of 18,000 units next year, the unit product cost of a particular product is $60.40. The company's selling, general, and administrative expenses for this product are budgeted to be $370,800 in total for the year. The company has invested $260,00 in this product and expects a return on investment of 11%. The target selling price based on the absorption costing approach for this product would be closest to which of the following? $67.04. $82.59. O $110.76. $81.00.

Eckert Company uses the absorption costing approach to cost-plus pricing to set prices for its products. The following information will be used for questions 11 and 12 Based on budgeted sales of 18,000 units next year, the unit product cost of a particular product is $60.40. The company's selling, general, and administrative expenses for this product are budgeted to be $370,800 in total for the year. The company has invested $260,00 in this product and expects a return on investment of 11%. The target selling price based on the absorption costing approach for this product would be closest to which of the following? $67.04. $82.59. O $110.76. $81.00.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Cool Car Motors assembles and sells motor vehicles and uses standard costing. Actual data relating…

A: Under Variable Costing method, variable costs are shown separately to arrive at the value of…

Q: Need help

A: Ladle Corporation wants to set the price for a product. To do this, they use absorption costing,…

Q: answer must be in table format or i will give down vote

A: a) Let's break it down step by step.Standard Cost Estimates:Materials per unit (in dollars): = Total…

Q: During the current year, OutlyTech Corp. expected to sell 24,000 telephone switches. Fixed costs for…

A: Introduction: The margin of safety is an accounting ratio that determines the proportion of sales…

Q: Magnussen, Inc., uses the absorption costing approach to cost-plus pricing described in the text to…

A: Formula: Total product cost = Budgeted sales value x Unit product cost Multiplying budgeted sales…

Q: Based on a predicted level of production and sales of 30,000 units, a company anticipates total…

A: Contribution margin is defined as what revenue is left with the firm after deduction of its variable…

Q: The Cost accountant of a medium size manufacturing firm that specializing in producing one product…

A: The production budget is used to estimate the units that should be produced during the year. It can…

Q: Sampson Merchandising Firm is developing its budgets for Year 2. The Year 1 income statement is as…

A: A BUDGETED INCOME STATEMENT IS A FINANCIAL REPORT THAT SHOWS THE ESTIMATED REVENUE,, 99, 254);…

Q: Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 691,000…

A: Desired ending inventory refers to the targeted quantity or value of goods or products that a…

Q: (Appendix 12A) Qualls Company makes a product that has the following costs: Direct materials Direct…

A: To determine the cost-plus pricing for Qualls Company's product, we first calculated the total…

Q: Kennedy Company makes and sells designer handbags and the production manager is assessing the…

A: Calculations of expected gross margin for each of the production levels Production level: 20,000…

Q: Kate's Kale Chips produces a healthy snack made primarily of kale. Each bag of the product sells for…

A: The cost of manufacturing is directly correlated with the type of cost accounting known as variable…

Q: I want to answer this question

A: Step 1: Introduction to the Absorption CostingIn cost accounting, absorption costing refers to the…

Q: Solve

A: Step 1: Step 2: Step 3: Step 4:

Q: As a newly hired management accountant, you have been asked to prepare a profit plan for the company…

A: The Break-even point is the optimum point of no profit no loss as at this point the firm is earning…

Q: As a newly hired management accountant, you have been asked to prepare a profit plan for the company…

A: Break even point is the optimum point of No profit no loss as at this point the firm is earning a…

Q: Gonzales Corp. needs to set a target price for its newly designed product EverReady. The following…

A: Absorption Cost Accounting: It means the allocation of all the manufacturing cost to the product…

Q: (a2) Compute desired ROI per unit for the new product. (Round answer to 2 decimal places, e.g.…

A: The costs of a product are classified as fixed and variable costs. The unit cost is calculated as…

Q: Accounting Question

A: An adjusting journal entry is a journal entry made at the end of an accounting period in a company's…

Q: If a company plans to sell 40000 units of product but sells 60000 units, the most appropriate…

A: All the budget was made on the planned unit sales of 40000. Actual units sold are 60000. Comparison…

Q: GHI Company manufactures two products that sell to the same market. Its budget and operating results…

A: Contribution margin variance refers to the variance which is computed by figuring the difference…

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Eckert Company uses the absorption costing approach to cost-plus pricing to set prices for its products. The
following information will be used for questions 11 and 12
Based on budgeted sales of 18,000 units next year, the unit product cost of a particular product is $60.40. The
company's selling, general, and administrative expenses for this product are budgeted to be $370,800 in total
for the year. The company has invested $260,00 in this product and expects a return on investment of 11%.
The target selling price based on the absorption costing approach for this product would be closest to which
of the following?
$67.04.
$82.59.
O $110.76.
$81.00.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Working Note #1:- Calculation of desired profit

VIEW

Step 3: Working Note #2:-

VIEW

Step 4: Working Note #3:-

VIEW

Solution

VIEW

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Based on a predicted level of production and sales of 24,000 units, a company anticipates total contribution margin of $79,200, fixed costs of $24,000, and operating income of $55,200. Based on this information, the budgeted operating income for 21,000 units would be: Multiple Choice $55,200. $103,200. $45,300. $44,571. $79,200.
Ladle Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 81,000 units next year, the unit product cost of a particular product is $45.30. The company's selling and administrative expenses for this product are budgeted to be $1,898,000 in total for the year. The company has invested $262,000 in this product and expects a return on investment of 14%. The markup on absorption cost for this product would be: a. 14% b. 52.7% c. 51.7% d. 65.7%
Cleaning Care Inc. expects to sell 9,000 mops. Fixed costs (for the year) are expected to be $13,000, unit sales price is expected to be $11, and unit variable costs are budgeted at $7. Cleaning Care's margin of safety (MOS) in units is:
As a newly hired management accountant, you have been asked to prepare a profit plan for the company for which you work. As part of this task, you've been asked to do some what-if analyses. Following is the budgeted Information regarding the coming year: Selling price per unit Variable cost per unit Fixed costs (per year) Required: $ 100.00 60.00 1,113,040 1. What is the breakeven volume, in units and dollars, for the coming year? 2. Assume that the goal of the company is to earn a pretax (operating) profit of $316,000 for the coming year. How many units would the company have to sell to achieve this goal? 3. Assume that of the $60 variable cost per unit the labor-cost component is $27. Current negotiations with the employees of the company indicate some uncertainty regarding the labor cost component of the variable cost figure presented above. What is the effect on the breakeven point in units if selling price and fixed costs are as planned, but the labor cost for the coming year is…
Required information Eckert Company uses the absorption costing approach to cost plus pricing to set prices for its products. Based on budgeted sales of 18.000 units next year, the unit product cost of a particular product is $60.40. The company's selling general, and administrative expenses for this product are budgeted to be $370.800 in total for the year. The company has invested $260.000 in this product and expects a return on investment of T (Appendix 12A) The markup on absorption cost for this product would be closest to which of the following O O O M4T 36.74 ALIK HON 3 Save & Submit
AAA Manufacturing Firm has provided the following sales, cost and expense figures in relation to expected operations for the coming year. You are tasked to prepare forecast Statements of Financial Performance using flexible budget techniques and incorporating the following information.All units are sold when manufactured due to the highly perishable nature of the company’s product. As such there are no inventories of raw materials, work in process or finished goods on hand.The selling price of the company’s single product is $50.00 and the expected sales quantity for the coming year is in the vicinity of 20,000 and 25,000 units.Required: Prepare an Income Statement budget using flexible budgeting techniques at production and sales levels of:(Scenario a) 20,000 units(Scenario b) 25,000 units Question: 1. Total fixed factory overhead under Scenario A (No dollar sign and comma) 2. Gross profit under Scenario B? (No dollar sign and comma) 3. Total non-manufacturing expenses under…
Given help with this problem is solution
Ruth, the owner of Crystal Clean, is planning for the next year. She uses the absorption method to determine the evaluation of employees and how much to increase their hourly wage. She has budgeted the following information: Variable operating expenses $4 per unitFixed operating expenses $211900 Variable manufacturing cost $11 per unitFixed manufacturing cost $253000 Units to be produced 25300 unitsUnit selling price $31 per unit Year 1 Year 2 Beginning inventory (units) 0 1400 Actual production (units) 23800 25800 Sales volume (units) 22400 26500 There were no price or efficiency variances for either year. Ruth writes off any fixed MOH volume variance directly to COGS. Calculate the gross margin for year 1.…
Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 625,000 units, estimated beginning inventory is 109,000 units, and desired ending inventory is 89,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.Material A 0.50 lb. per unit @ $0.64 per poundMaterial B 1.00 lb. per unit @ $2.33 per poundMaterial C 1.20 lb. per unit @ $0.78 per poundThe dollar amount of Material B used in production during the year is a.$2,114,475 b.$1,127,720 c.$1,691,580 d.$1,409,650