Atlas Corporation relies on the absorption costing approach to cost$-$plus pricing to determine the selling price of a new product. Management plans to produce and sell $30,000$ units of the new product per year. The new product would require an investment of $$30,000,000$ and has a required return on investment of $20\%.$

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$$The Corporation has estimated the following information for the new product per unit:

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Item Per Unit

Direct Materials $$90$

Direct Labour $$70$

Variable Manufacturing Overhead $$30$

Variable Marketing Expenses $$6.$

The management has estimated the Fixed Manufacturing Overhead to be equal to $$4,200,000,$ and the fixed marketing expenses to be equal to $$400,000.$

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Required:

$*$ Determine the markup percentage on absorption cost for the new product. $(2\mathrm{.}5$ Marks$)$

$*$ Determine the selling price for the new product using the absorption costing approach to cost$-$plus pricing. $(1$ Mark$)$

$*$ Assume that Atlas Corporation can produce and sell only $20,000$ units, compute the net income or net loss?