Quamma Corporation makes a product that has the following costs:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling and administrative expenses Fixed selling and administrativeexpenses Per Unit$ 16.20$ 13.80$ 1.10Per Year$ 553,800$ 2.80$ 551,000 The company uses the absorption costing approach to cost-plus pricing as described in the text. The pricing calculations are based on budgeted production and sales of 26,000 units per year.The company has invested $510,000 in this product and expects a return on investment of 9%. Required:a. Compute the markup on absorption cost. Note: Round your intermediate and final answer to 2 decimal places.b. Compute the selling price of the product using the absorption costing approach. Note: Round your intermediate and final answer to 2 decimal places.
Quamma Corporation makes a product that has the following costs:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling and administrative expenses Fixed selling and administrativeexpenses Per Unit$ 16.20$ 13.80$ 1.10Per Year$ 553,800$ 2.80$ 551,000 The company uses the absorption costing approach to cost-plus pricing as described in the text. The pricing calculations are based on budgeted production and sales of 26,000 units per year.The company has invested $510,000 in this product and expects a return on investment of 9%. Required:a. Compute the markup on absorption cost. Note: Round your intermediate and final answer to 2 decimal places.b. Compute the selling price of the product using the absorption costing approach. Note: Round your intermediate and final answer to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Quamma Corporation makes a product that has the following costs:Direct materialsDirect
laborVariable manufacturing overheadFixed manufacturing overheadVariable selling and
administrative expenses Fixed selling and administrativeexpenses Per Unit$ 16.20$ 13.80$ 1.10Per
Year$ 553,800$ 2.80$ 551,000 The company uses the absorption costing approach to cost-plus
pricing as described in the text. The pricing calculations are based on budgeted production and
sales of 26,000 units per year.The company has invested $510,000 in this product and expects a
return on investment of 9%. Required:a. Compute the markup on absorption cost. Note: Round
your intermediate and final answer to 2 decimal places.b. Compute the selling price of the product
using the absorption costing approach. Note: Round your intermediate and final answer to 2
decimal places.
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