The next two questions are based on Yellow Company is considering the introduction of a new product line. The following information has been assembled about the line: Expected annual sales in units investment required Production costs: 60,000 P1,000,000 P 15 Variable cost of production Fixed manufacturing overhead Selling and administrative.costs: Variable (freight & commissions) Fixed (total) P 300,000 1 P 200,000 24. The company requires a 20% return on inveştment on all product lines. The compai uses the absorption costing method to pricing. The markup needed to achieve desired ROI would be (to the nearest tenth of a percent): а. 20.0% C. 39.2% b. 38.3% d. 46.0%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The next two questions are based on the following data:
Yellow Company is considering the introduction of a new product line. The following
information has been assembled about the line:
Expected annual sales in units
Investment required
Production costs:
Variable cost of production
Fixed manufacturing overhead
Selling and administrative.costs:
Variable (freight & commissions)
Fixed (total)
60,000
P1,000,000
15
P 300,000
P.
1
P 200,000
24. The company requires a 20% return on inveştment on all product lines. The compay
uses the absorption costing method to pricing. The markup needed to achieve tihe
desired ROI would be (to the nearest tenth of a percent):
20.0%
C. 39.2%
d. 46.0%
а.
b. 38.3%
Transcribed Image Text:The next two questions are based on the following data: Yellow Company is considering the introduction of a new product line. The following information has been assembled about the line: Expected annual sales in units Investment required Production costs: Variable cost of production Fixed manufacturing overhead Selling and administrative.costs: Variable (freight & commissions) Fixed (total) 60,000 P1,000,000 15 P 300,000 P. 1 P 200,000 24. The company requires a 20% return on inveştment on all product lines. The compay uses the absorption costing method to pricing. The markup needed to achieve tihe desired ROI would be (to the nearest tenth of a percent): 20.0% C. 39.2% d. 46.0% а. b. 38.3%
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