The Following Data Pertain to Parson Corporation's Portable Air Conditioner

question 35

Essay

The following data pertain to Parson Corporation's portable air conditioner:
$\begin{array} { | l | r | } \hline \text { Variable manufacturing cost } & \$ 240 \\\hline \text { Applied fixed manufacturing cost } & 80 \\\hline \text { Variable selling and administrative cost } & 60 \\\hline \text { Allocated fixed selling and administrative cost } & ? \\\hline\end{array}$ To achieve a target price of $450 per air conditioner, the markup percentage on total unit cost is 12%.
Required:
A. Calculate the fixed selling and administrative cost allocated to each air conditioner.
B. For each of the following bases, determine the appropriate percentage markup on cost that will result in a target price of $450 per air conditioner: (1) variable manufacturing cost, (2) absorption manufacturing cost, and (3) total variable cost. (Round percentages to the nearest one-hundredth of a percent.)

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Definitions:

Goodwill Amortization

The systematic reduction of the recorded value of goodwill on a company's financial statements over time, although often goodwill is not amortized under current accounting standards but is instead tested annually for impairment.

Reporting Purposes

The reasons or objectives behind collecting and presenting financial or operational information, often dictated by regulatory requirements, investor relations, or internal management needs.

Tax Purposes

Refers to the reasons or intent behind financial or accounting decisions, calculations, or classifications that impact tax liability.

Net Operating Loss Carryforward

A tax provision that allows a company to utilize a taxable loss in one period to offset taxable profits in future periods.