(Appendix 12A)Ritchie Corporation Manufactures a Product That Has the Following

question 123

Essay

(Appendix 12A)Ritchie Corporation manufactures a product that has the following costs:

$\begin{array}{lrr} & \text { Per unit }& \text { Per year } \\\text { Direct materials }&\$20.70\\\text { Direct labour } & 11.80 & \\\text { Variable manufacturing overhead } & 3.20 & \\\text { Fixed manufacturing overhead } & & \$ 817,700 \\\text { Variable SG\&A expenses } & 4.10 & \\\text { Fixed SG\&A expenses } & & 691,900\end{array}$

The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 37,000 units per year.

The company has invested $160,000 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:

Heroin

An opioid drug made from morphine, a natural substance taken from the seed pod of various opium poppy plants, often used illicitly for its euphoric effects.

Withdrawal Process

This is the sequence of actions or steps undertaken to reduce dependency on a substance, often associated with managing withdrawal symptoms.

High Fever

A body temperature significantly above the normal range, often a symptom of infection or other medical conditions and can lead to discomfort or serious health issues if not addressed.

Opioid

Opium, drugs derived from opium, and similar synthetic drugs. Also known collectively as narcotics.