For many years, Manama Corporation has used a straightforward absorption costing approach to cost plus pricing, with a makup recently lost considerable business to foreign competitors that have become very aggressive in the marketplace These firms app costing. An example of Manama Corporation's product no. 700, which has the following unit-cost characteristics direct materials 505 manufacturing overhead, $50; and selling and administrative expenses. $40. The going market price for an identical product of identical 120 which is below what Manama Corporation is charging 25% the Required: a) What is Manama Corporation's selling price for product no. 700 under its current absorption costing approach to cost plus pricing? Om b) If Manama Corporation used target costing for item no. 700, what should have been its target cost per unit if the company desired to meet market pre of $260 and maintain its current rate of profit on sales (2 marks) For the toolbar, press ALT-F10 (PC) or ALT+FN+FTO (Mac). IE B IUS Paragraph 10pt ES A AI. X V Arial 11 (2 028 (6) FE X X 1 + DELL 100 For many years, Manama Corporation has used a straightforward absorption costing approach to cost-plus pricing, with a markup percentage of 25% thas recently lost considerable business to foreign competitors that have become very aggressive in the marketplace. These firms appear to be using target costing. An example of Manama Corporation's product no. 700, which has the following unit-cost characteristics: direct materiais, $65, direct labor. manufacturing overhead, $50, and selling and administrative expenses, $40. The going market price for an identical product of identical quality is $200 which is below what Manama Corporation is charging Required: a) What is Manama Corporation's selling price for product no. 700 under its current absorption costing approach to cost plus pricing? b) If Manama Corporation used target costing for item no. 700, what should have been its target cost per unit if the company desired to meet market price of $260 and maintain its current rate of profit on sales. (2 marks) For the toolbar, press ALT+F10 (PC) or ALT-FN-F10 (Mac) *** IX Q BIVS E 10pt Arial Paragraph AY 2 V TH20 52 FERE xx % 5 DELL ta Required: a) What is Manama Corporation's selling price for product no. 700 under its current absorption costing approach to cost-plus pricing? (2 marks) b) If Manama Corporation used target costing for item no. 700, what should have been its target cost per unit if the company desired to meet market price of $260 and maintain its current rate of profit on sales. (2 marks) For the toolbar, press ALT-F10 (PC) or ALT+FN+F10 (Mac). IUS Paragraph v Arial Ev Ev AV Q 10pt AIX 5 11 FEXX, 2 1 E EB 52 (1) 00 DELL
