Reference no: EM132840800

Victoria Corporation is planning to use absorption cost-plus pricing to determine the price for a new product that will be of interest to consumers interested in gardening and home landscaping. The product reduces the manual labor involved in planting new garden spaces. Victoria Company will need to invest $180,000 in operating assets to produce and sell 14,000 units. Its required return on investment (ROI) in its operating assets is 15%.

Victoria Company's accounting department has provided cost estimates for the new product as follows:

Per Unit Total
Direct materials $5
Direct labor $4
Variable manufacturing overhead $2
Fixed manufacturing overhead $65,000
Variable selling and administrative expenses $1
Fixed selling and administrative expenses $48,000

Required: Show all work.

Problem a. Determine the unit product cost for the new product.

Problem b. Determine the markup percentage on absorption cost for the new product.

Problem c. Determine the selling price for the new product using the absorption costing approach.