Question
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company gathered the following information: Number of units to be produced and sold each year 7,000 Unit product cost $ 46.00 Estimated annual selling and administrative expenses $ 22,200 Estimated investment required by the company $ 620,000 Desired return on investment (ROI) 12% Required: Compute the markup percentage on absorption cost required to achieve the desired ROI. Compute the selling price per unit.
Shimada Products Corporation of Japan plans to introduce a new electronic component to the market at a target selling price of $15 per unit. The company is investing $12,400,000 to purchase the equipment it needs to produce and sell 372,000 units per year. Its required rate of return on all investments is 12%. Required: Compute the component's target cost per unit. Note: Round your answer to 2 decimal places. Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company gathered the following information: Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. Note: Do not round intermediate calculations. Round your answer to 2 decimal placesStep by Step Solution
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