The firm manufactures a product with the following costs: Direct materials→₱18.00; Direct labor→₱11.90; Variable manufacturing overhead→₱2.10; Fixed manufacturing overhead→₱1,422,000; Variable selling, general and administrative expenses→₱3.60; Fixed selling, general and administrative expenses→₱1,540,500. The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 79,000 units per year. The company has invested ₱420,000 in this product and expects a return on investment of 15%. The selling price based on the absorption costing approach would be closest to: a. ₱108.04 b. ₱73.90 c. ₱47.29 d. ₱73.1
The firm manufactures a product with the following costs: Direct materials→₱18.00; Direct labor→₱11.90; Variable manufacturing overhead→₱2.10; Fixed manufacturing overhead→₱1,422,000; Variable selling, general and administrative expenses→₱3.60; Fixed selling, general and administrative expenses→₱1,540,500. The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 79,000 units per year. The company has invested ₱420,000 in this product and expects a return on investment of 15%. The selling price based on the absorption costing approach would be closest to: a. ₱108.04 b. ₱73.90 c. ₱47.29 d. ₱73.1
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 4BE
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Question
The firm manufactures a product with the following costs: Direct materials→₱18.00; Direct labor→₱11.90; Variable manufacturing overhead→₱2.10; Fixed manufacturing overhead→₱1,422,000; Variable selling, general and administrative expenses→₱3.60; Fixed selling, general and administrative expenses→₱1,540,500. The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 79,000 units per year. The company has invested ₱420,000 in this product and expects a return on investment of 15%. The selling price based on the absorption costing approach would be closest to:
a. ₱108.04
b. ₱73.90
c. ₱47.29
d. ₱73.10
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