Turnhilm, Inc. is taking into consideration adding a small electric mower to its product line. Management is convinced that to be competitive, the mower can not be priced above $139.
The company requires a minimum return of 25% in its investments. Launching the new product would require an investment of $8, 000, 000. Sales are expected to be 40, 000 products of the mower per year. Essential: Compute the point cost of a mower.
57. The supervision of Hettler Corporation would want to set the selling price on the new product making use of the absorption being approach to cost-plus pricing. The company’s accounting department offers supplied this estimates intended for the new item: Management programs to produce promote 4, 500 units from the new product every year. The new product would need an investment of $643, 500 and contains a required return on investment of twenty percent.
Required: a. Determine the device product cost for the brand new product. n. Determine the markup percentage on ingestion cost pertaining to the new product. c. Decide the target value for the modern product making use of the absorption priced at approach. 58. Bourret Organization is bringing out a new merchandise whose direct materials expense is $42 every unit, direct labor cost is $16 every unit, variable manufacturing expense is $9 per device, and variable selling and administrative expense is $3 per product.
The twelve-monthly fixed making overhead associated with the product is $84, 000 as well as annual set selling and administrative expense is $16, 000. Management plans to make and sell 5, 000 devices of the cool product annually. The modern product could require a great investment of $1, 022, 500 and includes a required revenue of 10%.
Management want to set the selling price over a new product using the absorption priced at approach to cost-plus pricing. Required: a. Identify the unit product cost to get the new merchandise. b. Determine the markup percentage about absorption expense for the brand new product. c. Determine the target selling price to get the new item using the compression costing approach.