Pharoah Doors, Inc. is in the process of setting a target price on its newly designed patio door. Cost data relating to the door at a budgeted volume of 5,000 units is as follows: Per Unit Total Direct materials $250 Direct labour Variable manufacturing overhead 170 80 Fixed manufacturing overhead $500,000 Variable selling and administrative expenses 13 Fixed selling and administrative expenses 410,000 Pharoah uses cost-plus pricing that provides it with a 25% ROI on its patio door line. A total of $3,500,000 in assets is committed to production of the new door. (a) Calculate each of the following under the absorption approach: i. Markup percentage needed to provide desired ROI. ii. Target price of the patio door. $

Pharoah Doors, Inc. is in the process of setting a target price on its newly designed patio door. Cost data relating to the door at a budgeted volume of 5,000 units is as follows: Per Unit Total Direct materials $250 Direct labour Variable manufacturing overhead 170 80 Fixed manufacturing overhead $500,000 Variable selling and administrative expenses 13 Fixed selling and administrative expenses 410,000 Pharoah uses cost-plus pricing that provides it with a 25% ROI on its patio door line. A total of $3,500,000 in assets is committed to production of the new door. (a) Calculate each of the following under the absorption approach: i. Markup percentage needed to provide desired ROI. ii. Target price of the patio door. $

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 3PB: A local picnic table manufacturer has budgeted the following overhead costs: They are considering...

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