The company makes a product with the following costs: Direct materials→₱15.70; Direct labor→₱19.70; Variable manufacturing overhead→₱3.50; Fixed manufacturing overhead→₱1,146,600.00; Variable selling, general and administrative expenses→₱2.00; Fixed selling, general and administrative expenses→₱984,900. The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 49,000 units per year. The company has invested ₱340,000 in this product and expects a return on investment of 9%. Direct labor is a variable cost in this company. The markup on absorption cost is closest to: a. 118.6% b. 36.5% c. 35.5% d. 9.0%
The company makes a product with the following costs: Direct materials→₱15.70; Direct labor→₱19.70; Variable manufacturing overhead→₱3.50; Fixed manufacturing overhead→₱1,146,600.00; Variable selling, general and administrative expenses→₱2.00; Fixed selling, general and administrative expenses→₱984,900. The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 49,000 units per year. The company has invested ₱340,000 in this product and expects a return on investment of 9%. Direct labor is a variable cost in this company. The markup on absorption cost is closest to: a. 118.6% b. 36.5% c. 35.5% d. 9.0%
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 4P: Using the data in P4-2 and Microsoft Excel: 1. Separate the variable and fixed elements. 2....
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The company makes a product with the following costs: Direct materials→₱15.70; Direct labor→₱19.70; Variable manufacturing overhead →₱3.50; Fixed manufacturing overhead→₱1,146,600.00; Variable selling, general and administrative expenses→₱2.00; Fixed selling, general and administrative expenses→₱984,900. The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 49,000 units per year. The company has invested ₱340,000 in this product and expects a return on investment of 9%. Direct labor is a variable cost in this company. The markup on absorption cost is closest to:
a. 118.6%
b. 36.5%
c. 35.5%
d. 9.0%
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