Roal Corporation Manufactures a Product That Has the Following Costs

question 12

Essay

Roal 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 37,000 units per year.
The company has invested $220,000 in this product and expects a return on investment of 9%.
Required:
a.Compute the markup on absorption cost.
b.Compute the selling price of the product using the absorption costing approach.

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Definitions:

Principal

In finance, the original sum of money borrowed in a loan, or put into an investment. In mathematics, it can refer to the principal amount, or initial size of a quantity before interest or growth.

Nearest Cent

Rounding a monetary amount to the closest cent, typically as part of currency calculations to ensure practical transactions.

Decimal Places

The number of digits to the right of a decimal point in a number.

Exponential Rate

A growth rate characteristic of functions of the form y = a * e^(bx), where e is the base of the natural logarithm, approximately equal to 2.71828.