The Management of Hettler Corporation Would Like to Set the Selling

question 21

Essay

The management of Hettler Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing.The company's accounting department has supplied the following estimates for the new product: Management plans to produce and sell 4,000 units of the new product annually.The new product would require an investment of $643,000 and has a required return on investment of 20%.
Required:
a.Determine the unit product cost for the new product.
b.Determine the markup percentage on absorption cost for the new product.
c.Determine the target selling price for the new product using the absorption costing approach.

Recognize the significance and application of various components of an MRP system including bills of material, time-phased product structures, and master production schedules.

Distinguish between concepts like phantom bills, planning bills, and bills of material.

Comprehend the difference between finite capacity scheduling and MRP in terms of capacity considerations.

Understand the calculation and importance of lead times, inventory availability, and purchase orders in MRP.

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Definitions:

MRP

Material Requirements Planning, a system for planning production and inventory control, ensuring materials and products are available for production and delivery.

Time Period

Refers to a specific duration or interval in which certain events or processes take place.

Net Requirements

The actual amount of materials or resources needed for production, calculated after considering the on-hand inventory and pending orders, to meet the production schedule.

Part B

Often associated with Medicare, Part B refers to medical insurance coverage for certain services and products not covered by Part A.