The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. To calculate: The unit product cost for remodeled product.

Question

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Answer 1

Question

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

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Answer 2

Question

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

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Answer 3

Question

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

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Answer 4

Question

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Answer 6

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

Answer 7

Chapter 6A, Problem 6A.12P

1.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

Answer 8

1.

Expert Solution

Answer to Problem 6A.12P

Total unit production cost $28

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Fixed manufacturing:

Fixed manufacturing =Fixed manufactring overheadUnits sold=66,00012,0005.5

Particular
Direct material cost	12
Direct labor	8
Variable manufacturing OH	3
Fixed manufacturing OH	5
Total Unit product cost	28

Total unit production cost $28

Answer 13

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

Answer 14

2.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

Answer 15

2.

Expert Solution

Answer to Problem 6A.12P

Mark up percentage is 37.5%

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+20000=$210,000

Product margin per unit:

product margin per unit=21000020000=$10.5

Markup percentage:

Markup percentage=10.528=37.5%

Mark up percentage is 37.5%

Answer 20

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

Answer 21

3.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

Answer 22

3.

Expert Solution

Answer to Problem 6A.12P

Thus required selling price is 38.5

Answer 23

3.

Expert Solution

Answer 24

3.

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Required selling price:

required selling price=10.5+28=38.5

Thus required selling price is 38.5

Answer 27

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

Answer 28

4.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

Answer 29

4.

Expert Solution

Answer to Problem 6A.12P

Return on investment is 18.45 %

Answer 30

4.

Expert Solution

Answer 31

4.

Expert Solution

Answer 32

Expert Solution

Answer 33

Explanation of Solution

sales=19000×38.5=731,500

Cost of goods sold=19000×28=532,000

Particular	Amount
Sales	731500
Less: COGS	532000
Gross margin	199500
Less: Selling expense	79000
Income	120500

ROI=120500650000×100=18.54%

Return on investment is 18.45 %

Answer 34

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

Answer 35

5.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

Answer 36

5.

Expert Solution

Answer to Problem 6A.12P

new price is 40.5

Answer 37

5.

Expert Solution

Answer 38

5.

Expert Solution

Answer 39

Expert Solution

Answer 40

Explanation of Solution

Required rate of return:

Required rate of return =650000×20%=130,000

Product margin:

product margin = Net income + selling expense = 130000+60000+19000=$209,000

Product margin per unit:

product margin per unit=20900019000=$10.45

Markup percentage:

Markup percentage=10.4528=39.3%

Particular	Amount
Net earning	120500
Target net earning	130000
Differential earning	9500
Number of units	19000
Price to be increased by:	2
Old price	38.5
New price	40.5

Thus new price is 40.5

Answer 41

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Answer 42

6.

To determine

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

Answer 43

6.

Expert Solution

Answer to Problem 6A.12P

Optimal selling price is $41.58, profit on optimal selling price is $179020. The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Answer 44

6.

Expert Solution

Answer 45

6.

Expert Solution

Answer 46

Expert Solution

Answer 47

Explanation of Solution

Optimal selling price:

Selling price=38.5+38.5×8%=$41.58

Profit on optimal selling price:

total sales =41.58×19000=790,020

Particular	Amount
Sales	790020
Less: COGS	532000
Gross margin	285020
Less: Selling expense	79000
Income	179020

The increase in the price of the product will be recommended as the company is earning more profit even if the sales is decreasing

Answer 48

Ch. 6A - Absorption Costing Approach to Cost-Plus Pricing...Ch. 6A - Prob. 6A.2E Ch. 6A - Prob. 6A.3E Ch. 6A - Prob. 6A.4E Ch. 6A - Prob. 6A.7E Ch. 6A - Prob. 6A.8P Ch. 6A - Prob. 6A.9P Ch. 6A - Prob. 6A.10P Ch. 6A - Prob. 6A.11P Ch. 6A - Prob. 6A.12P

The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. To calculate: The unit product cost for remodeled product.

Solution Summary: The author explains that the incremental profit earned on sales of each unit as a result of all associated variable cost is termed as the contribution margin.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level

Answer to Problem 6A.12P

Explanation of Solution

Want to see more full solutions like this?

Chapter 6A Solutions

The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. To calculate: The unit product cost for remodeled product.

Solution Summary: The author explains that the incremental profit earned on sales of each unit as a result of all associated variable cost is termed as the contribution margin.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. To calculate: The unit product cost for remodeled product.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. To calculate: The markup percentage on absorption cost for the remodeled

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. The Selling price company should establish mark up percentage on absorption cost.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. The return on Investment Company would earn at the lower sales volume.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. The revised selling price at lower sales level.

Answer to Problem 6A.12P

Explanation of Solution

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin. The revised selling price and profit at lower sales level

Answer to Problem 6A.12P

Explanation of Solution

Want to see more full solutions like this?

Chapter 6A Solutions

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The unit product cost for remodeled product.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

To calculate: The markup percentage on absorption cost for the remodeled

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The Selling price company should establish mark up percentage on absorption cost.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The return on Investment Company would earn at the lower sales volume.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price at lower sales level.

Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.

The revised selling price and profit at lower sales level