MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
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Question
Chapter 6A, Problem 6A.9P
1.
To determine
Concept Introduction:
For accepting an extra offer company needs to recover at least variable cost from that offer. To recover the cost from that offer, the company sold it at variable cost. To accept these types of fixed cost is irrelevant for accepting the offer.
To Calculate:Unit product cost.
2.
To determine
Concept Introduction:
For accepting an extra offer company needs to recover at least variable cost from that offer. To recover the cost from that offer company sold it at variable cost. To accept these types of fixed cost is irrelevant for accepting the offer.
To Calculate: Mark up percentage on cost.
3.
To determine
Concept Introduction:
For accepting an extra offer company needs to recover at least variable cost from that offer. To recover the cost from that offer company sold it at variable cost. To accept these types of fixed cost is irrelevant for accepting the offer.
To Calculate: Selling price of new product.
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Absorption Costing Approach to Cost-Plus Pricing
Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $200,000 in operating assets to produce and sell 16,000 units. Its required return on investment (ROI) in its operating assets is 18%. The accounting department has provided cost estimates for the new product as shown below:
Required:
1. What is the unit product cost for the new product?
2. What is the markup percentage on absorption cost for the new product?
3. What selling price would the company establish for its new product using a markup percentage on absorption cost? (Round your answer to the nearest penny.)
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K A product costs $500 to manufacture and $30 to market and $10 to distribute (ship to customers) R&D costs are allocated at $20 per unit. Based on a targeted rate of return, manager uses a mark-up of 10%. What is the markup component based on a Cost-Plus pricing approach?
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