(a)
Absorption-cost pricing: This pricing approach is used by the companies to set the target selling price based on only
Target selling price: This is the selling price set by company to cover the costs incurred and a desired profit.
Formula:
To determine: The target selling price per unit, using absorption-cost pricing
(b)
Variable-cost pricing: This pricing approach is used by the companies to set the target selling price based on all variable manufacturing costs, but fixed costs, plus desired profit.
To determine: The target selling price per unit, using variable-cost pricing
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Managerial Accounting: Tools for Business Decision Making
- Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost Refer to the information for Speedy Petes on the previous page. Coefficients shown by a regression program for Speedy Petes data are: Required: Use the results of regression to make the following calculations: 1. Calculate the fixed cost of deliveries and the variable rate per delivery. 2. Construct the cost formula for total delivery cost. 3. Calculate the budgeted cost for next month, assuming that 3,000 deliveries are budgeted. (Note: Round answers to the nearest dollar.) 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:arrow_forwardUse the following information for the next 2 questions (8 & 9). Division X produces and sells a product to external and internal customers. Per-unit information about its operations include: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 8. If X is operating at capacity and has unlimited external customer demand, what should be the minimum transfer price? 9. If X has sufficient excess capacity to meet internal demand, what should be the minimum transfer price?arrow_forwardRitner Corporation manufactures a product that has the following costs: Per Unit $ 22. 30 Per Year Direct materials Direct labor $ 13. 80 Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 2. 20 $449,600 $ 1.60 $591,700 The company uses the absorption costing approach to cost-plus pricing as described in the text. The pricing calcuiations are based on budgeted production and sales of 29,100 units per year. The company has invested $360,100 in this product and expects a return on investment of 9%. Required: b. Compute the selling price of the product using the absorption costing approach. (Round your intermediate and final answer to 2 decimal places.) a Markup percentage on absorption cost b Selling pricearrow_forward
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- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning