Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional BusinessNight Glow Inc. recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows:Variable costs per unit: Fixed costs: Direct materials$32 Factory overhead$180,000Direct labor12 Selling and administrative expenses80,000Factory overhead8 Selling and administrative expenses7 Total variable cost per unit$59 Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 10% return on invested assets.Required: 4. (Appendix) Assuming that the variable cost method is used, determine the following:a. Variable cost amount per unit b. Markup percentage %c. Selling price per unit

Variable costing method is one of the costing method, in which total variable costs (costs that…

Answered: Product Pricing using the Cost-Plus…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 8P: The production of a new product required Zion Manufacturing Co. to lease additional plant...

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Product Pricing using the Cost-Plus Approach Methods; Differential Analysis for Accepting Additional Business

Night Glow Inc. recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows:

Variable costs per unit:		Fixed costs:
Direct materials	$32	Factory overhead	$180,000
Direct labor	12	Selling and administrative expenses	80,000
Factory overhead	8
Selling and administrative expenses	7
Total variable cost per unit	$59

Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 10% return on invested assets.

Required:

4. (Appendix) Assuming that the variable cost method is used, determine the following:

a. Variable cost amount per unit
b. Markup percentage		%
c. Selling price per unit

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