Sara's company manufactures a product with the following costs: Per Unit Per Year Direct materials $...

Sara's company manufactures a product with the following costs:

	Per Unit		Per Year
Direct materials	$	25.30
Direct labor	$	14.30
Variable manufacturing overhead	$	2.50
Fixed manufacturing overhead			$	1,275,000
Variable selling and administrative expenses	$	2.40
Fixed selling and administrative expenses			$	1,249,500

The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 85,000 units per year.

The company has invested $260,000 in this product and expects a return on investment of 15%.

The selling price based on the absorption costing approach would be closest to: (Do not round intermediate calculations.)

Multiple Choice

a. $74.66

b. $64.70

c. $82.00

d. $51.25

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Dickson Corporation makes a product with the following costs: Per Unit Per Year Direct materials $...

Dickson Corporation makes a product with the following costs: Per Unit Per Year Direct materials $ 18.20 Direct labor $ 22.30 Variable manufacturing overhead $ 2.90 Fixed manufacturing overhead $ 1,296,000 Variable selling and administrative expenses $ 1.10 Fixed selling and administrative expenses $ 1,104,000 The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 60,000 units per year. The company has invested $320,000 in...

Joeston Corporation makes a product with the following costs: Per Unit Per Year Direct materials $...

Joeston Corporation makes a product with the following costs: Per Unit Per Year Direct materials $ 18.10 Direct labor $ 15.80 Variable manufacturing overhead $ 5.40 Fixed manufacturing overhead $ 473,200 Variable selling and administrative expenses $ 4.70 Fixed selling and administrative expenses $ 301,600 The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 26,000 units per year. The company has invested $616,000 in...

Upstate Co. manufactures a product that has the following standard costs per unit: Direct materials:...

Upstate Co. manufactures a product that has the following standard costs per unit: Direct materials: 40 yards at $2.70 per yard $108 Direct labor: 7 hours at $18 per hour 126 Total $234 Following information pertains to July: Direct material purchased: 42,500 yards at $2.78 per yard Direct material used: 38,000 yards Direct labor used: 7,500 hours at $18.30 per hour Budgeted production: 1,200 units Actual completed production: 1,050 units...

In the year, TGIT Inc. incurred the following costs: Direct materials $ 4.00 per unit Direct...

In the year, TGIT Inc. incurred the following costs: Direct materials $ 4.00 per unit Direct labour $ 5.00 per unit Variable manufacturing overhead $ 3.00 per unit Fixed manufacturing overhead $ 100,000 Variable selling expenses $ 1.00 per unit Fixed selling expenses $ 40,000 In the year, TGIT produced 40,000 units and sold 42,000 units. The company had no beginning or ending work-in-process inventory. However, there are 5,000 units in beginning finished goods inventory. The 5,000 units produced in...

Rippey Corporation manufactures a single product with the following unit costs for 5,000 units: Direct materials...

Rippey Corporation manufactures a single product with the following unit costs for 5,000 units: Direct materials $ 60 Direct labor 30 Factory overhead (40% variable) 90 Selling expenses (60% variable) 30 Administrative expenses (20% variable) 15 Total per unit $225 Recently, a company approached Rippey Corporation about buying 1,000 units for $225. Currently, the models are sold to dealers for $412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on...

Lorraine manufactures a single product with the following full unit costs for 3,000 units: Direct materials...

Lorraine manufactures a single product with the following full unit costs for 3,000 units: Direct materials $80 Direct labor 40 Manufacturing overhead (40% variable) 120 Selling expenses (60% variable) 40 Administrative expenses (10% variable) 20 Total per unit $300 A company recently approached Lorraine with a special order to purchase 500 units for $300. Lorraine currently sells the models to dealers for $550. Capacity is sufficient to produce the extra 1,000 units. No selling expenses would be incurred on the...

Variable costs per unit: Direct materials $ 91 Fixed costs per year: Direct labor $ 1,317,900...

Variable costs per unit: Direct materials $ 91 Fixed costs per year: Direct labor $ 1,317,900 Fixed manufacturing overhead $ 4,068,300 Fixed selling and administrative expenses $ 2,088,000 The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 57,300 units and sold 55,300 units. The company’s only product is sold for $234 per unit. The company is considering using either super-variable costing or a variable...

Cost data for the single product-line company are as follows: Variable costs per unit: Direct materials...

Cost data for the single product-line company are as follows: Variable costs per unit: Direct materials $ 4 Direct labor 9 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 17 Fixed costs per month: Fixed manufacturing overhead $ 135,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 304,000 The product sells for $50 per unit. Production and sales data for the following two months are as follows: Units Produced Units...

Bush Industries currently manufactures 56,000 units of a product with the following costs per unit Direct...

Bush Industries currently manufactures 56,000 units of a product with the following costs per unit Direct materials......................................... $6.00 Direct labor.............................................. $18.00 Variable manufacturing overhead............ $9.00 Fixed manufacturing overhead................$12.00 Variable selling..........................................$3.00 Fixed selling..............................................$4.00 The company has the capacity to produce 60,000 units. The product regularly sells for $60. A wholesaler has offered to pay $55 a unit for 5,000 units and will pick up the units, thereby saving Bush the variable selling costs. If the special order is accepted, what would be...

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0...

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor (1.9 hrs. @ $12.00 per hr.) 22.80 Overhead (1.9 hrs. @ $18.50 per hr.) 35.15 Total standard cost $ 77.95 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month...

Subjects