2.

Quamma Corporation makes a product that has the following costs: Per Year Per Unit $17.50 $15.10 $ 2.40 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $881,400 $ 4.10 $564,000 The company uses the absorption costing approach to cost-plus pricing as described in the text. The pricing calculations are based on budgeted production and sales of 39,000 units per year. The company has invested $640,000 in this product and expects a return on investment of 9%. Required: a. Compute the markup on absorption cost. (Round your intermediate and final answer to 2 decimal places.) 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 price Tavis Robotics Corporation has developed a new robot-model F1-73that has been designed to outperform a competitor's best- selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $5.30 per hour, and sells for $123,000. In contrast, model FI-73 has a useful life of 30,000 hours of service and its operating cost is $3.30 per hour. Tavis has not yet established a selling price for model FI-73. From a value-based pricing standpoint what is Fl-73's economic value to the customer over its 30,000 hour useful life? Wetherald Products, Inc., has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 61,500 $ 108 $ 66 $ 24 The Pool Products Division is currently purchasing 5,300 of these pumps per year from an overseas supplier at a cost of $87 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division