Exercise A-2 Absorption Costing Approach to Setting a Selling Price [LOA-2] Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 13,000 Unit product cost $ 30 Projected annual selling and administrative expenses $ 54,000 Estimated investment required by the company $ 300,000 Desired return on investment (ROI) 20 % The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the desired ROI. ((Round your final answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. )
Exercise A-2 Absorption Costing Approach to Setting a Selling Price [LOA-2] Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 13,000 Unit product cost $ 30 Projected annual selling and administrative expenses $ 54,000 Estimated investment required by the company $ 300,000 Desired return on investment (ROI) 20 % The company uses the absorption costing approach to cost-plus pricing. Required: 1. Compute the markup required to achieve the desired ROI. ((Round your final answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. )
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise A-2 Absorption Costing Approach to Setting a Selling Price [LOA-2]
Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information:
| Number of units to be produced and sold each year | 13,000 | ||
| Unit product cost | $ | 30 | |
| Projected annual selling and administrative expenses | $ | 54,000 | |
| Estimated investment required by the company | $ | 300,000 | |
| Desired |
20 | % | |
The company uses the absorption costing approach to cost-plus pricing.
Required:
1. Compute the markup required to achieve the desired ROI. ((Round your final answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. )
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