EXERCISE A-2 Absorption Costing Approach to Setting a Selling Price (LO2] Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year. Unit product cost.... Projected annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI)... 14,000 $25 $50,000 $750,000 12% ... Required: The company uses the absorption costing approach to cost-plus pricing. 1. Compute the markup required to achieve the desired ROI. 2. Compute the selling price per unit.

EXERCISE A-2 Absorption Costing Approach to Setting a Selling Price (LO2] Martin Company is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year. Unit product cost.... Projected annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI)... 14,000 $25 $50,000 $750,000 12% ... Required: The company uses the absorption costing approach to cost-plus pricing. 1. Compute the markup required to achieve the desired ROI. 2. Compute the selling price per unit.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.4C: Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company,...

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Refer to Cornerstone Exercise 18.3. Required: 1. Calculate the cost of each unit using variable costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using variable costing? 3. Prepare a variable-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
Refer to Cornerstone Exercise 7.10. (Round percentages to four significant digits and cost allocations to the nearest dollar.) Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. 3. What if it cost 2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products?
(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.
Brief Exercise 3-28 Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period Refer to the information for Speedy Petes on the previous page. Assume that this information was used to construct the following formula for monthly delivery cost. TotalDeliveryCost=41,850+(12.00NumberofDeliveries) Required: Assume that 3,000 deliveries are budgeted for the coming year. Use the total delivery cost formula to make the following calculations: 1. Calculate total variable delivery cost for the coming year. 2. Calculate total fixed delivery cost for the year. 3. Calculate total delivery cost for the year. Use the following information for Brief Exercises 3-26 through 3-29: Speedy Petes is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffee shops. Data for the past 8 months were collected as follows:
Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year's plans: Each color on the banner must be printed one at a time. Thus, for example, a four-color banner will need to be run through the printing operation four separate times. The total production volume last year was 600 banners, as shown below. The four-color banner is a new product offering for the upcoming year. The owner believes that the expected 600-unit increase in volume from last year means that direct labor expenses should increase by 100% (600 + 600). What do you think?