Total Per Unit $7 Direct materials .. $5 Variable manufacturing overhead . Fixed manufacturing overhead Variable selling and administrative expenses. Fixed seling and administrative expenses $2 $116,000 $1 $50,000 ..... 41
Absorption Costing Approach to Cost-Plus Pricing
Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $200,000 in operating assets to produce and sell 16,000 units. Its required return on investment (ROI) in its operating assets is 18%. The accounting department has provided cost estimates for the new product as shown below:
Required:
1. What is the unit product cost for the new product?
2. What is the markup percentage on absorption cost for the new product?
3. What selling price would the company establish for its new product using a markup percentage on absorption cost? (Round your answer to the nearest penny.)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
