P8-32 PROBLEM IMAGE BELOW

A. determine the standard markup precentage for each of the following cost bases. Round answers to two deciman places.

1. full cost, including fixed and variable manufacturing costs, and fixed and variable selling and administrative cost.

2. manufacturing costs plus variable selling and administrative costs.

3. manufacturing costs.

4. variable costs.

5. variable manuracturing costs.

b. explain why the markup percentages become progressively larger from requirement (a), parts (1) through (5).

c. determine the initial price of a set of tiger IRons using the manufacturing cost markup and the variable manufacturing cost markup.

d. do you believe the controller's approach to product pricing is reasonable? why or why not?

a. Determine the markup percentage on variable costs required to earn the desired profit b. Use variable cost markup to determine a suggested selling price for the flash dive c. For the flash drive, break the markup on variable costs into separate parts for fixed costs price for the flash drive. le costs into separate parts for fixed costs and d Deene the markup percentage on manufacturing costs required to earn the desired profit e. Use the manufacturing costs markup to determine a suggested selling P flash drive. Evaluate the variable and the manufacturing cost approaches to determine the markup percentage. P8-32. Price Setting: Multiple Products Augusta Golf, Ine. produces a wide variety of golfing equipment. In the past. product managers set prices using their professional j led to the significant underpricing of some products (with lost profits) and the significant overpric. ing of other products (with lost sales volume). You have been asked to assist Woods in developing a corporate approach to pricing. The output of your work should be a cost be used to develop initial selling prices for each product. Although product managers are allowed to adjust these prices to meet competition and to take advantage of market opportunities, they must explain such deviations in writing. The following 2014 cost information from the accounting records is available: udgment. Jack Woods, the new controller, believes this practice has ing ofocther proxlbetes oth lost sales volume) You have bocon asd od to assin -based formula that can Selling and Administrative Costs Manufacturing Costs S350,000 100,000 $ 75,000 200,000 Variable In 2014. Augusta Golf reported earnings of $120,000. However, the controller believes that proper pricing should produce earnings of at least $150,000 on the same sales mix and unit volume. Accond ingly, you are to use the preceding cost information and a target profit of S150,000 in developing cost-based pricing formula. Selling and administrative expenses are not currently associated wih individual products. However, you have obtained the following unit production cost information for the Tiger Irons: $150 50 Total $200