The Sloan Corporation must invest $176,000 to produce and market 29,000 units of Product X each year. The company uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Other cost information regarding Product X is as follows:
Per Unit Total Direct materials $ 11.00 Direct labor $ 7.00 Variable manufacturing overhead $ 6.00 Fixed manufacturing overhead $ 203,000 Variable selling and administrative expenses $ 5.00 Fixed selling and administrative expenses $ 188,500
If Sloan Corporation requires a 10% return on investment, then the markup percentage on absorption cost for Product X (rounded to the nearest percent) would be:
Noreen rechecks 2017-04-04
a. 39%
b. 14%
c. 27%
d. 20%
The Sloan Corporation must invest $176,000 to produce and market 29,000 units of Product X each year. The company uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Other cost information regarding Product X is as follows:
| Per Unit | Total | ||||||
| Direct materials | $ | 11.00 | |||||
| Direct labor | $ | 7.00 | |||||
| Variable manufacturing overhead | $ | 6.00 | |||||
| Fixed manufacturing overhead | $ | 203,000 | |||||
| Variable selling and administrative expenses | $ | 5.00 | |||||
| Fixed selling and administrative expenses | $ | 188,500 | |||||
If Sloan Corporation requires a 10% return on investment, then the markup percentage on absorption cost for Product X (rounded to the nearest percent) would be:
Noreen rechecks 2017-04-04
a. 39%
b. 14%
c. 27%
d. 20%
Related questions
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:
| Beginning inventory | 0 | |
| Units produced | 34,000 | |
| Units sold | 25,900 | |
| Selling price per unit | $ | 482 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 16 |
| Fixed per year | $ | 362,600 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 240 |
| Direct labor cost per unit | $ | 56 |
| Variable manufacturing overhead cost per unit | $ | 34 |
| Fixed manufacturing overhead per year | $ | 578,000 |
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.
13 A manufacturing company that produces a single product hasprovided the following data concerning its most recent month ofoperations: |
Selling price | $149 |
Units in beginning inventory | 0 |
Units produced | 2,770 |
Units sold | 2,520 |
Units in ending inventory | 250 |
Variable costs per unit: | |
Direct materials | $51 |
Direct labor | $20 |
Variable manufacturing overhead | $10 |
Variable selling and administrative | $12 |
Fixed costs: | |
Fixed manufacturing overhead | $96,950 |
Fixed selling and administrative expenses | $35,280 |
The total gross margin for the month under absorption costingis: |
$83,160
$17,640
$130,320
$141,120
14 A manufacturing company that produces a single product hasprovided the following data concerning its most recent month ofoperations: |
Units in beginning inventory | 0 |
Units produced | 4,750 |
Units sold | 4,650 |
Units in ending inventory | 100 |
Variable costs per unit:
Direct materials | $ | 56 |
Direct labor | $ | 58 |
Variable manufacturing overhead | $ | 21 |
Variable selling and administrative | $ | 19 |
Fixed costs:
Fixed manufacturing overhead | $ | 99,750 |
Fixed selling and administrative | $ | 46,500 |
What is the variable costing unit product cost for the month?
$154 per unit
$175 per unit
$135 per unit
$141 per unit
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15 Bartelt Inc., which produces a single product, has providedthe following data for its most recent month of operations: |
Number of units produced | 4,600 |
Variable costs per unit: | |
Direct materials | $108 |
Direct labor | $105 |
Variable manufacturing overhead | $5 |
Variable selling and administrative expense | $12 |
Fixed costs: | |
Fixed manufacturing overhead | $184,000 |
Fixed selling and administrative expense | $322,000 |
There were no beginning or ending inventories. The absorptioncosting unit product cost was: |
$213 per unit
$258 per unit
$218 per unit
$340 per unit
16 Rehmer Corporation is working on its direct labor budget forthe next two months. Each unit of output requires 0.09 directlabor-hours. The direct labor rate is $8.50 per direct labor-hour.The production budget calls for producing 5,600 units in June and6,100 units in July. |
Required: | ||||||||||||||||||
| Construct the direct labor budget for the next two months,assuming that the direct labor work force is fully adjusted to thetotal direct labor-hours needed each month. (Round youranswers to 2 decimal places.)
|
GIVEN: Kann Corporation produces industrial robots forhigh-precision manufacturing. The following information isavailable:
Per Unit Total
Direct materials $25.00
Direct labor $10.00
Variable manufacturing overhead $6.00
Fixed manufacturing overhead $36,000
Variable selling and administrative costs $4.00
Fixed selling and administrative costs $15,000
The company has a desired ROI of 20%. It has invested assets of$420,000. It anticipates making and selling 3,000 units peryear.
REQUIRED:
Part 1: Using the total (full) cost concept, determine the (a)unit cost amount; (b) markup percentage; and (c) unit targetselling price.
Part 2: Using the product (absorption) cost concept, determinethe (a) unit cost amount; and (b) markup percentage.
Part 3: Using the variable cost concept, determine the (a) unitcost amount; and (b) markup percentage.
Part 4: What is the target unit selling price under the threecost assumptions?
Part 5: What else should be considered when setting theproduct's selling price?
Part 6: Which of the three costing concepts would be mostappropriate in each of the following situations? 1. Externalreporting for GAAP 2. Normal (long-run) pricing 3. Evaluatingspecial orders
Part 7: Kann Corporation received a special order for 500 robotsat $50 each from a foreign customer. Acceptance of the order wouldincrease variable selling costs by $1.70 per unit because ofshipping costs, but would not increase fixed costs or interferewith any current orders. Prepare a differential analysis todetermine whether the special order should be accepted or not.
My school has no tutors for this; I will post what little Ihave, and attempt more myself, but I really do not know what I'mdoing. I do not know how these figures that I have weredetermined:
| Full cost for 3000 units | Absorption cost for 3000units | Variable costs for 3000units | |||||||||
| Direct materials | $75,000 | $75,000 | $75,000 | ||||||||
| Direct labor | 30,000 | 30,000 | 30,000 | ||||||||
| Variable manufacturingoverhead | 18,000 | 18,000 | 18,000 | ||||||||
| Fixed manufacturingoverhead | 36,000 | 36,000 | |||||||||
| Variable selling overhead | 12,000 | 12,000 | |||||||||
| Fixed selling overhead | 15,000 | ||||||||||
| Total cost | 186,000 | 159,000 | 135,000 | ||||||||
| Cost per unit | 62 | 53 | 45 | ||||||||
| Desired profit = 42,000 *20% | 84,000 | 84,000 | 84,000 | ||||||||
| Sales value | 270,000 | 243,000 | 219,000 | ||||||||
| Sales price per unit | 90 | 81 | 73 | ||||||||
