Ritchie 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 $160,000 in this product and expects a return on investment of 15%.
Required:
a.Compute the markup on absorption cost.
b.Compute the selling price of the product using the absorption costing approach.

Question

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The Answer of Ritchie 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 $160,000 in this product and expects a return on investment of 15%.
Required:
a.Compute the markup on absorption cost.
b.Compute the selling price of the product using the absorption costing approach.

Ritchie Corporation Manufactures a Product That Has the Following Costs