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What is the unit product cost for the new product

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Reference no: EM133077060

Question - Aldean Company wants to use absorption cost-plus pricing to set the selling price on a new product. The company plans to invest $290,000 in operating assets to produce and sell 29,000 units. Its required return on investment (ROI) in its operating assets is 18%. The accounting department has provided cost estimates for the new product as shown below:

Per Unit

Direct materials $9.00

Direct labor $7.00

Variable manufacturing overhead $4.00

Fixed manufacturing overhead

Variable selling and administrative expenses $3.00

Fixed selling and administrative expenses

Required -

1. What is the unit product cost for the new product?

2. What is the mark-up percentage on absorption cost for the new product?

3. What selling price would the company establish for its new product using a mark-up percentage on absorption cost?

Reference no: EM133077060

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