ACC604 National University Week 4 Absorption Costing Approach Exercise
Martin Company 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 | 12,500 | ||
Unit product cost | $ | 30 | |
Projected annual selling and administrative expenses | $ | 60,000 | |
Estimated investment required by the company | $ | 530,000 | |
Desired return on investment (ROI) | 20 | % | |
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The company uses the absorption costing approach to cost-plus pricing.
Required:
1. Compute the markup required to achieve the desired ROI. ((Round your final answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
2. Compute the selling price per unit. (Round your intermediate and final answers to 2 decimal places. )