Number of units to be produced and sold each year Unit product cost Estimated annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) .... 14,000 $25 $50,000 $750,000 12%

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter14: Decentralized Operations
Section: Chapter Questions
Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...
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Absorption Costing Approach to Cost-Plus Pricing

Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information:

Required:

1. Compute the markup percentage on absorption cost required to achieve the desired ROI.

2. Compute the selling price per unit.

Number of units to be produced and sold each year
Unit product cost
Estimated annual selling and administrative expenses
Estimated investment required by the company
Desired return on investment (ROI) ....
14,000
$25
$50,000
$750,000
12%
Transcribed Image Text:Number of units to be produced and sold each year Unit product cost Estimated annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) .... 14,000 $25 $50,000 $750,000 12%
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