(Appendix 12A)Qualls Company Makes a Product That Has the Following

question 26

Essay

(Appendix 12A)Qualls Company makes a product that has the following costs:

$\begin{array}{lccc}& \underline { \text { Per unit } } & \underline { \text { Per year } } \\\text { Direct materials } & \$ 17.30 & \\\text { Direct labour } & 12.90 & \\\text { Variable manufacturing overhead } & 4.20 & \\\text { Fixed manufacturing overhead } & & \$ 916,800 \\\text { Variable SG\&A expenses } & 2.00 & \\\text { Fixed SG\&A expenses } & & 907,200\end{array}$

The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 48,000 units per year.

The company has invested $360,000 in this product and expects a return on investment of 15%.

Required:

a) Compute the markup on absorption cost.
b) Compute the target selling price of the product using the absorption costing approach.

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Definitions:

Decision Making

The cognitive process of selecting a course of action among several alternatives to achieve a desired outcome.

Clients

are individuals or groups that receive professional services or advice from a service provider, such as consultants, counselors, or lawyers.

Counselors

Professionals trained to provide guidance on personal, social, or psychological problems.

Post-Formal Thought

This is a stage of cognitive development that goes beyond Piaget's formal operational stage, involving the ability to deal with complex, uncertain, and contradictory information.