Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $130,000 in operating assets to produce and sell 13.000 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: Total Per und 57.40 $5.00 $2.40 38 Direct waterials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 96,850 $1.40 $ 46,735 Required: 1. What is the unit product cost for the new product? (Round intermediate calculations and final answer to 2 decimal places.) 2. What is the markup percentage on absorption cost for the new product? (Round intermediate calculations to 2 decimal places.) 3. What selling price would the company establish for its new product using a markup percentage on absorption cost? (Round intermediate calculations and final answer to 2 decimal places.) 1 unit product cost 2 Markup percentage on absorption cost 3 Selling price per unit 9 Maria Lorenzi owns an ice cream stand that she operates during the summer months in West Yellowstone, Montana. She is unsure how to price her ice cream cones and has experimented with two prices in successive weeks during the busy August season. The number of people who entered the store was roughly the same each week. During the first week, she priced the cones at $6.20 and 2.570 cones were sold. During the second week, she priced the cones at $6,70 and 2100 cones were sold. The variable cost of a cone is $170 and consists solely of the costs of the ice cream and the cone itself. The fixed expenses of the ice cream stand are $2,065 per week. Required: 1. What profit did Maria eam during the first week when her price was $6.20? 2. At the start of the second week, Marla increased her selling price by what percentage? What percentage did unit sales decrease? (Round your percentage answers to 2 decimal ploce.) 3. What profit did Marla earn during the second week when her price was $6702 4. What was Maria's increase (decrease) in profits from the first week to the second week? 1. Profit 2 Percentage increase in selling price Porcentage decrease in unit Sales 3. Pront 4 McDermott Company has developed a new Industrial component called IC-75. The company is excited about IC-75 because it offers superior performance relative to the comparable component sold by McDermott's primary competitor. The competing part sells for $1.480 and needs to be replaced after 2.280 hours of use. It also requires $340 of preventive maintenance during its useful life. The IC-75's performance capabilities are similar to its competing product with two important exceptions-It needs to be replaced atter 4,560 hours of use and it requires $440 of preventive maintenance during its useful le. Required: From a value-based pricing standpoint 1. What is the reference value that McDermott should consider when pricing IC 75? 2. What is the differentiation value offered by IC 75 relative the competitor's offering for each 4,560 hours of usage? 3. What is IC 75's economic value to the customer over its 4,560 hout life? 4. What range of possible prices should McDermott consider wlion setting a price for IC-75 1 Reference value 2 Differentiation value 3 Economic value to the customer 4 Range of possible prices Value-based price Shimada Products Corporation of Japan is anxious to enter the electronic calculator market, Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $15. Shimada's required rate of return is 12% on all investments. An investment of $12,760,000 would be required to purchase the equipment needed to produce the 348,000 calculators that management believes can be sold each year at the $15 price, Required: Compute the target cost of one calculator (Round your answer to 2 decimal places.) Targul cost per unit
