Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 8, Problem 8.2AP
(a)
To determine
Cost-plus pricing: The pricing approach used by the companies to set the target selling price based on the cost plus desired profit is referred to as cost-plus pricing.
Formula:
Markup percentage: The percentage of
Formula:
Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.
Formula for ROI per unit:
To determine: The markup percentage and target selling price for the new parts of Parts LC
(b)
To determine
Cost-plus pricing: The pricing approach used by the companies to set the target selling price based on the cost plus desired profit is referred to as cost-plus pricing.
Formula:
Markup percentage: The percentage of return on investment (ROI) achieved per unit over the total cost of production per unit, is referred to as markup percentage.
Formula:
To determine: The markup percentage and target selling price for the new parts of Parts LC, if the volume is 40,000 units, instead of 50,000 units
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Students have asked these similar questions
Cullumber Corporation is in the process of setting a selling price for a recently designed product. The following data relate to this
product at a budgeted volume of 60,000 units.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
(a1)
✓ Your answer is correct.
Total unit variable cost $
Total unit fixed cost
Total unit cost
eTextbook and Media
Cullumber uses cost-plus pricing to set its target selling price and has a markup on total unit cost of 30%.
(a2)
Compute total unit variable cost, total unit fixed cost, and total unit cost for the new product.
✓ Your answer is correct.
Desired ROI per unit $
eTextbook and Media
$
(a3)
Per Unit
$
$30
Target selling price $
40
10
6
86
69
Total
155
Compute desired ROI per unit for the new product. (Round answer to 2 decimal places, e.g. 5.27.)
$2,220,000
1.920,000
46.50
Compute target selling price for the new product.…
Cullumber Corporation is in the process of setting a selling price for a recently designed product. The following data relate to this
product at a budgeted volume of 60,000 units.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
(a1)
Your answer is correct.
Total unit variable cost $
Total unit fixed cost
Total unit cost
eTextbook and Media
(a2)
Cullumber uses cost-plus pricing to set its target selling price and has a markup on total unit cost of 30%.
Per Unit
$
Desired ROI per unit $
$30
Compute total unit variable cost, total unit fixed cost, and total unit cost for the new product.
$
40
10
6
86
Total
69
$2,220,000
155
1,920,000
Compute desired ROI per unit for the new product. (Round answer to 2 decimal places, e.g. 5.27.)
Attempts: 1 of 5 used
Solve the following two independent cases
Case 1:
LAC Corporation is in the process of setting a selling price for a new product it has just designed. The
following data is related to this product for a budgeted volume of 20,000 units
Per unit
Total
Direct Materials.
15
Direct Labor
13
Variable Manufacturing Overhead
19
Fixed Manufacturing Overhead
320,000
Variable Selling and Administrative Expenses
7
Fixed Selling and Administrative Expenses
180,000
The Corporation uses the cost-plus pricing to set its target selling price. The markup on total unit cost is 25%
Required: Answer the following three questions - circle the correct answer
The total cost per unit is:
a. $79
b. $54
c. $25
d. None of the options
The markup per unit is:
a. $67.5
b. $19.75
c. $31.25
d. None of the options
The target selling price per unit is:
a. $98.75
b. $19.75
c. $13.5
d. None of the options
Chapter 8 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 8 - What are the two types of pricing environments for...Ch. 8 - Prob. 2QCh. 8 - Prob. 3QCh. 8 - Benz Corporation produces a filter that has a per...Ch. 8 - What is the basic formula for the markup...Ch. 8 - Prob. 6QCh. 8 - Stanley Corporation manufactures an electronic...Ch. 8 - Sheen Co. manufactures a standard cabinet for a...Ch. 8 - Prob. 9QCh. 8 - Prob. 10Q
Ch. 8 - What is a transfer price? Why is determining a...Ch. 8 - When setting a transfer price, what objective(s)...Ch. 8 - What are the three approaches for determining...Ch. 8 - Prob. 14QCh. 8 - What is the general formula for determining the...Ch. 8 - When determining the minimum transfer price, what...Ch. 8 - In what circumstances will a negotiated transfer...Ch. 8 - What costs are excluded from the cost base when...Ch. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - Onega Company manufactures computer hard drives....Ch. 8 - Mussatto Corporation produces snowboards. The...Ch. 8 - Jaymes Corporation produces high-performance...Ch. 8 - Momies Corporation produces microwave ovens. The...Ch. 8 - During the current year, Chudrick Corporation...Ch. 8 - Rooney Small Engine Repair charges 42 per hour of...Ch. 8 - Prob. 8.7BECh. 8 - Use the data from BE8-7 but assume that the...Ch. 8 - Use the data from BE8-7 but assume that the units...Ch. 8 - Using the data in BE8-4, compute the markup...Ch. 8 - Using the data in BH8-4, compute the markup...Ch. 8 - Maize Water is considering introducing a water...Ch. 8 - Gundy Corporation produces area rugs. The...Ch. 8 - Presented below are data relating to labor for...Ch. 8 - The fastener division of Southern Fasteners...Ch. 8 - Mesa Cheese Company has developed a new cheese...Ch. 8 - Eckert Company is involved in producing and...Ch. 8 - Leno Company makes swimsuits and sells these suits...Ch. 8 - Kaspar Corporation makes a commercial-grade...Ch. 8 - Schopp Corporation makes a mechanical stuffed...Ch. 8 - Almas Recording Studio rents studio time to...Ch. 8 - Gibbs Corporation produces industrial robots for...Ch. 8 - Second Chance Welding rebuilds spot welders for...Ch. 8 - Rey Custom Electronics (RCE) sells and installs...Ch. 8 - Wassons Classic Cars restores classic automobiles...Ch. 8 - Chen Companys Small Motor Division manufactures a...Ch. 8 - The Cycle Division of Ayala Company has the...Ch. 8 - Prob. 8.13ECh. 8 - The Bathtub Division of Kirk Plumbing Corporation...Ch. 8 - The Appraisal Department of Jean Bank performs...Ch. 8 - Crede Inc. has two divisions. Division A makes and...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Rap Corporation produces outdoor portable...Ch. 8 - Information for Gibbs Corporation is given in...Ch. 8 - National Corporation needs to set a target price...Ch. 8 - Prob. 8.2APCh. 8 - Suttons Electronic Repair Shop has budgeted the...Ch. 8 - Word Wizard is a publishing company with a number...Ch. 8 - Prob. 8.5APCh. 8 - Comm Devices (CD) is a division of Worldwide...Ch. 8 - Prob. 8.7APCh. 8 - Anderson Windows Inc. is in the process of setting...Ch. 8 - CURRENT DESIGNS As a service to its customers,...Ch. 8 - Prob. 8.1BYPCh. 8 - Construction on the Bonita Full-Service Car Wash...Ch. 8 - Real-World Focus Merck Co., Inc. is a global,...Ch. 8 - Prob. 8.5BYPCh. 8 - Prob. 8.6BYPCh. 8 - The January 2011 issue of Strategic Finance...
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