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Messina Company wants to use absorption cost - plus pricing to establish the selling price for a new product. The company plans to invest $
Messina Company wants to use absorption costplus pricing to establish the selling price for a new product. The company plans to invest $ in operating assets that provide the capacity to make units. Its required return on investment ROI in its operating assets is Messina's Accounting Department set a goal of producing and selling units during the new product's first year of availability. It also provided the following cost estimates for the new product:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
Per Unit
$
$
$
$
$
$
Total
$
Required:
If the company plans to produce and sell units, what is the absorption unit product cost for its new product? Round your answer to decimal places.
At a planned sales volume of units, what is the markup percentage on absorption cost for the new product? Round your answer to decimal place.
Using absorption costplus pricing and assuming a planned sales volume of units, what selling price would the company establish for its new product? Round intermediate calculations and final answer to decimal places.
Using an absorption format, calculate Messina's net operating income if it actually produces and sells only units instead of units at the absorption costplus price from requirement Calculate the return on investment ROI at this lower sales volume. Round your intermediate calculations to decimal places. Round final answer to decimal place.
Assume that Messina's controller recommends raising the new product's selling price in an effort to achieve the desired ROI at the lower sales volume of units.
a What would become the new markup percentage? Round your intermediate calculations to decimal places. Round final answer to decimal place.
b What would become the new selling price? Round your intermediate percent to decimal place. Round other intermediate calculations and final answer to decimal places.
table Unit product cost,$ Markup percentage on absorption cost
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