The Presidio Company has redesigned one of its products and is deciding on the pricing for the redesigned product. The total product cost to produce the normal volume of 10,000 units is $200,000. Total selling costs are estimated to be $80,000. The target return on investment is 25% and annual investment required to make and sell the normal volume of 10,000 units is $100,000. The company uses the absorption costing approach to compute the mark-up percentage when setting the target price. What is the mark-up percentage? a) 48.5% b) 50.0% c) 52.5% d) 90.0%

The Presidio Company has redesigned one of its products and is deciding on the pricing for the redesigned product. The total product cost to produce the normal volume of 10,000 units is $200,000. Total selling costs are estimated to be $80,000. The target return on investment is 25% and annual investment required to make and sell the normal volume of 10,000 units is $100,000. The company uses the absorption costing approach to compute the mark-up percentage when setting the target price. What is the mark-up percentage? a) 48.5% b) 50.0% c) 52.5% d) 90.0%

Name: The Presidio Company has redesigned one of its products and is decidin
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: The Presidio Company has redesigned one of its products and is deciding on the pricing for the redesigned product. The total product cost to produce the normal volume of 10,000 units is $200,000. Total selling costs are estimated to be $80,000. The t

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...

See similar textbooks

Similar questions

Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $132.00 per unit. The company requires a profit of 0.20 of selling price. How much is the target cost per unit? Round to two decimal places.
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 6,000 Unit product cost $ 50 Estimated annual selling and administrative expenses $ 24,000 Estimated investment required by the company $ 300,000 Desired return on investment (ROI) 12 % Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year 9,500 Unit product cost $ 36 Estimated annual selling and administrative expenses $ 41,100 Estimated investment required by the company $ 370,000 Desired return on investment (ROI) 12 % Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit.
(Original question included in the attached image) The Presidio Company has redesigned one of its products and is deciding on the pricing for the redesigned product. The total product cost to produce the normal volume of 10,000 units is $200,000. Total selling costs are estimated to be $80,000. The target return on investment is 25% and annual investment required to make and sell the normal volume of 10,000 units is $100,000. The company uses the absorption costing approach to compute the mark-up percentage when setting the target price. What is the mark-up percentage? _____________________ a) 48.5% b) 50.0% c) 52.5% d) 90.0% _____________________ I got "C" as my final answer for this question, but just want to make sure it is correct.
Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular market price of $28. The $28 per unit is a: Multiple Choice Sunk cost. Opportunity cost. Out-of-pocket cost. Period cost. Incremental cost.
Martin Company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information: Number of units to be produced and sold each year. 10,500 24 32 Unit product cost Estimated annual selling and administrative expenses Estimated investment required by the company Desired return on investment (ROI) 34,800 $ 690,000 ok 12% nt Required: 1. Compute the markup percentage on absorption cost required to achieve the desired ROI. 2. Compute the selling price per unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.) nt ences 1. Markup percentage on absorption cost 2. Selling price per unit Prev 1 of 3 Next >
Galla Incorporated needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product. Galla expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials $ 13 Overhead $ 45,000 Direct labor 14 General and administrative 18,000 Overhead 12 General and administrative 18 Using the total cost method what price should Galla charge? Multiple Choice $71.25 $87.00 $82.50 $75.75 $69.60
Chang Industries has 1,500 defective units of product that already cost $44 each to produce. A salvage company will purchase the defective units as is for $20 each. Chang's production manager reports that the defects can be corrected for $36 per unit, enabling them to be sold at their regular market price of $36. The $44 per unit is a: Multiple Choice 15 Period cost. Sunk cost. Opportunity cost. Out-of-pocket cost. Incremental cost.
Company XYZ is conducting an engineering economic analysis to decide whether to make vs purchase position for a necessary element needed ins several products. Now the engineering department has established this information: Option A to purchase 10,000 units annually at a fixed price of $8.50 per unit. The cost of placing the order is insignificant as per the present cost accounting procedure. Option B to manufacture 10,000 units annually with a direct labor cost of $1.50 per unit, manufacturing overhead cost is allotted at 200% of direct labor (which is $3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on the information, should the unit be purchased or manufactured?
14. The Presidio Company has redesigned one of its products and is deciding on the pricing for the redesigned product. The total product cost to produce the normal volume of 10,000 units is $200,000. Total selling costs are estimated to be $80,000. The target return on investment is 25% and annual investment required to make and sell the normal volume of 10,000 units is $100,000. The company uses the absorption costing approach to compute the mark-up percentage when setting the target price. What is the mark-up percentage? a) 48.5%b) 50.0%c) 52.5%d) 90.0%
Valmont Company developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $8,800. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP-200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 13,000 hours before replacement. It only requires $1,400 of preventive maintenance during its useful life and it consumes $140 of electricity per 650 hours used. These figures compare favorably to the competing piece of equipment that sells for $13,000, needs to be replaced after 6,500 hours of use, requires $2,800 of…