Ritner Corporation Manufactures a Product That Has the Following Costs

question 99

Essay

Ritner Corporation manufactures a product that has the following costs:
The company uses the absorption costing approach to cost-plus pricing as described in the text. The pricing calculations are based on budgeted production and sales of 30,400 units per year.The company has invested $361,400 in this product and expects a return on investment of 9%.Required:a. Compute the markup on absorption cost. (Round your intermediate and final answer to 2 decimal places.)b. Compute the selling price of the product using the absorption costing approach. (Round your intermediate and final answer to 2 decimal places.)

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Definitions:

High Barriers

Referring to the substantial obstacles that prevent new competitors from easily entering an industry or market.

Economic Profit

The financial gain achieved when revenues exceed the total opportunity costs, including both explicit and implicit costs.

Competitive Price-searcher

This term refers to a market situation where sellers have some control over the pricing of their products due to factors like brand differentiation and lack of perfect information among buyers.

Production Inefficiencies

Situations where resources are not used in the most cost-effective way, leading to waste and decreased output.