MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
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Chapter 6A, Problem 6A.10P
1.
To determine
Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.
To calculate: The unit product cost for remodeled product.
2.
To determine
Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.
To calculate: The markup percentage on absorption cost for the remodeled
3.
To determine
Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.
The Selling price company should establish mark up percentage on absorption cost.
4.
To determine
Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.
The
5.
To determine
Introduction: The incremental profit earned on sales of each unit as a result of all associated variable cost being deducted from the price of the product is termed as the contribution margin.
The revised selling price at lower sales level.
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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.)
K A product costs $500 to manufacture and $30 to market and $10 to distribute (ship to customers) R&D costs are allocated at $20 per unit. Based on a targeted rate of return, manager uses a mark-up of 10%. What is the markup component based on a Cost-Plus pricing approach?
Absorption Costing Approach to Cost-Plus Pricing
Currington Company wants to use absorption cost-plus pricing to set the selling price on a newly remodeled product. The company plans to invest $150,000 in operating assets to produce and sell 12,000 units. Its required return on investment (ROI) in its operating assets is 16%. The accounting department has provided cost estimates for the new product as follows:
Required:
1. What is the unit product cost for the remodeled product?
2. What is the markup percentage on absorption cost for the remodeled product?
3. What selling price would the company establish for its remolded product using a markup percentage on absorption cost?
4. Suppose the company actually sold only 10,000 units (instead of its planned sales volume of 12,000 units) at the selling price that you derived in requirement 3. What ROI did the company actually earn at this lower sales volume?
5. Assume that the company wants to raise the price of its newly remodeled product…
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