Reference no: EM131212906
The management of Archimbaldo Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product:
direct materials 35
direct labor 14
variable manufacturing overhead 9
fixed annual manufacturing overhead 270,000
variable selling and administrative expenses 1
fixed annual selling and administrative expenses 63,000
Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $3,002,400 and has a required return on investment of 10%.
Determine the unit product cost for the new product.
Determine the markup percentage on absorption cost for the new product.
Determine the selling price for the new product using the absorption costing approach.
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