Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $220,000 in operating

Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $220,000 in operating assets to produce and sell 22,000 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:

Per Unit Total
Direct materials $ 8.30
Direct labor $ 6.30
Variable manufacturing overhead $ 3.30
Fixed manufacturing overhead $ 173,800
Variable selling and administrative expenses $ 2.30
Fixed selling and administrative expenses $ 108,460

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For MBAs

Authors: Easton, Wild, Halsey, McAnally

7th Edition

1618532316, 978-1618532312

More Books

Students also viewed these Accounting questions