Question

The Sloan Corporation must invest $232,000 to produce and market 12,000 units of Product X each...

The Sloan Corporation must invest $232,000 to produce and market 12,000 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 $ 7.60
Direct labor $ 5.30
Variable manufacturing overhead $ 4.30
Fixed manufacturing overhead $ 63,600
Variable selling and administrative expenses $ 3.30
Fixed selling and administrative expenses $ 57,600


If Sloan Corporation requires a 25% 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

Business   Accounting   
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Answer #1
direct materials 7.6
Direct labor 5.3
Variable Moh 4.3
FMOH (63600/12000) 5.3
unit product cost 22.5
Selling and administrativ expense
Variable (12000*3.30) 39600
Fixed 57,600
total 97200
mark up % on Absorption Cost=
(Required ROI*investment)+selling & adm expense/(unit product*unit of sales)
(232000*25%)+97,200/(22.5*12000)
(58000+97200)/270,000
57% answer
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