Product pricing using cost plus Approach methods; Different analysis for accepting additional business Niht glow inc recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows: Variables costs per unit:                       fixed costs: Direct materials         $32        Factory overhead         $180,000 Direct labor                12  Selling and administration expenses80,000 Factory overhead        8 Selling and administration  expenses 7 Total variable cost per unit  $59 Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost plus approach to product pricing and has indicated that the halogen light must earn a 10% return on invested assets. Required: Note: Round all markup percentage to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar. 1. Determine the amount of desired profit from the production and sale of the halogen light.$ 2.Assuming that the product cost method is used , determine the following: a.Product cost amount per unit $ b. Markup percentage % c. Selling price per unit $ 3. Assuming that the total cost method is used determine the following: a.Total cost amount per unit $ b.Markup percentage % c. Selling price per unit $ 4.Assuming that the variable cost method i

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Product pricing using cost plus Approach methods; Different analysis for accepting additional business

Niht glow inc recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows:

Variables costs per unit:                       fixed costs:

Direct materials         $32        Factory overhead         $180,000

Direct labor                12  Selling and administration expenses80,000

Factory overhead        8

Selling and administration  expenses 7

Total variable cost per unit  $59

Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost plus approach to product pricing and has indicated that the halogen light must earn a 10% return on invested assets.

Required:

Note: Round all markup percentage to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar.

1. Determine the amount of desired profit from the production and sale of the halogen light.$

2.Assuming that the product cost method is used , determine the following:

a.Product cost amount per unit $

b. Markup percentage %

c. Selling price per unit $

3. Assuming that the total cost method is used determine the following:

a.Total cost amount per unit $

b.Markup percentage %

c. Selling price per unit $

4.Assuming that the variable cost method i

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Pricing Decisions
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
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education