Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 12, Problem 12.17E
Variable cost concept of product pricing
Based on the data presented in Exercise 12-15, assume that Willis Products Inc. uses the variable cost concept of applying the cost-plus approach to product pricing.
a.Determine the variable costs and the cost amount per unit for the production and sale of 200,000 units of medical tablets.
b.Determine the variable cost markup percentage per unit. Round to two decimal place.
c.Determine the selling price per unit. Round to the nearest dollar.
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Using the variable cost method of applying the cost-plus approach to product pricing, determine the selling price for 31,100 units using the following data: variable cost per unit, $22; total fixed
costs, $217,700; and desired profit, $279,900. Do not round intermediate calculations. Round your answer to the nearest whole dollar.
Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Company’s purchasing cost and number of purchase orders.The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are:
Intercept 15,021 (rounded to the nearest dollar)X variable 1 9.74 (rounded to the nearest cent)
Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the vari-able rate.
2. If Dohini Manufacturing Company estimates that next month will have 430 purchaseorders, what is the total estimated purchasing cost for that month? (Round your answer tothe nearest dollar.)3. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year andexpects 5,340 purchase orders? What will estimated total purchasing cost be? (Round youranswer to the nearest dollar.) What is the total fixed purchasing cost? Why doesn’t it equalthe fixed cost calculated in Requirement 1?
Mallory Company uses the product cost method of applying the cost-plus approach to product pricing. It produces and sells Product X at a total cost of $35
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fixed cost. The desired profit is $8 per unit.
Determine the markup percentage on product cost. Round your answer to one decimal place.
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Chapter 12 Solutions
Survey of Accounting (Accounting I)
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