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. $

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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