Ritner Corporation manufactures a product that has the following costs: Per Unit $ 22.50 $14.00 $2.40 Per Year Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $449,800 $ 1.80 $591,900 The company uses the absorption costing approach to cost-plus pricing as described in the text The pricing calculations are based on budgeted production and sales of 29,300 units per year. The company has invested $360,300 in this product and expects a return on investment of 9%. Required: a. Compute the markup on absorption cost. (Round your intermediate and final answer to 2 decimal places.) b. Compute the selling price of the product using the absorption costing approach. (Round your intermediate and finel enswer to 2 decimal places.) a Markup percentage on absorption cost bSelling price

Ritner Corporation manufactures a product that has the following costs: Per Unit $ 22.50 $14.00 $2.40 Per Year Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $449,800 $ 1.80 $591,900 The company uses the absorption costing approach to cost-plus pricing as described in the text The pricing calculations are based on budgeted production and sales of 29,300 units per year. The company has invested $360,300 in this product and expects a return on investment of 9%. Required: a. Compute the markup on absorption cost. (Round your intermediate and final answer to 2 decimal places.) b. Compute the selling price of the product using the absorption costing approach. (Round your intermediate and finel enswer to 2 decimal places.) a Markup percentage on absorption cost bSelling price

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jarvis Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 35,000 units of Product E are as follows: Variable costs: Direct materials $3.00 Direct labor 1.25 Factory overhead 0.75 Selling and administrative expenses 3.00 Total $8.00 Fixed costs: Factory overhead $50,000 Selling and administrative expenses 20,000 Jarvis desires a profit equal to a 14% rate of return on invested assets of $450,000. a. Determine the amount of desired profit from the production and sale of Product E. $ 63,000 b. Determine the total costs and the cost amount per unit for the production and sale of 35,000 units of Product E. Total manufacturing costs 350,000 V Cost amount per unit 10 c. Determine the markup percentage for Product E. 18 V % d. Determine the selling price of Product E. Round your answer to two decimal places.
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Basic Motor Corporation uses target costing. Assume that Basic marketing personnel estimate that the competitive selling price for the QuikCar in the upcoming model year will need to be $23,100. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,200 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Basic establish for the QuikCar for the upcoming model year?
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