DO lTl Exerr.

ir"

otnoute nn rkup pe rc en1 ti ::t

BEE.4 (LO 2), Ap Morales SA produces microwave ovens. The fbllowing per unit cost information is
C

available: direct materials €36, direct labor €24, variabie manufacturing overhead € 18, fixed manufacrur-
ing overhead €40, variable selling and administrative expenses €14, and f,xed selling and administrative
expenses €28. Its desired ROI per unit is €30. Compute its markup percentage using a total-cost
approach.

BII8.S {LO 2), Ap During the current yeal', Jiawei Ltd. expects to produce 10,000 units and has budgeted Cotr:pt:e ,Ri:-' ,. ' : ":-, '

perc er,;i !a
the following: net income HK$3,000,000, variable costs HK$1.1,000,000, and fixed costs HK$1'000,000'
It has invested assets of HK$ 15,000,000. The cornpany's budgeted ROI was 20%. What was its budgeted
markup percentage using a fu1l-cost approach?

BEtt.6 (Lo 3), Ap EEE&I Rooney Small Engine Repair charges $42 per hour of labor. It has
a ma- Use time-art;i-r:,::,'
job the of riding lawnmower, Rooney to determirc bii,.
terial loading percentage of 40%. On a recent replacing engine a

worked 10.5 hours and used palts with a cost of $700. Calculate Rooney's total biil.

Bl-l*.? (LO 4), Ap The Heating Division of Dimapur International produces a heating element that it Determine minitritrrt :',
sells to its customers for f45 per unit. Its variable cost per unit is 125, and its fixed cost per unit
is f,10.
Top management of Dimapur International woulcl iike the Heating Division to transfer 15,000 heating
units to another division within the company at a price of f,29. The Heating Division is operating at
full
capacity. What is the minimum transfer price that the Heating Division should accept?
etermine mininu.t nt txt : :t
IfEB.B (LO 4), Ap Use the data fi'om BE8.7 but assume that the Heating Division has sufiEcient excess
D ; i

price with excess capaci1.

capacity to provide the 15,000 heating units to the other division. What is the minimum transfer
that the Heating Division should accept?
Determine minim.unr lnLnslt
BEg.g {LO 4), Ap Use the data from BE8.7 but assume that the units being requested are special high-
i

special order.
performance units and that the division's variable cost would be f27 per unit (rather than f25). What is
the minimum transfer price that the Heating Division should accept?
,.81-l,B.I0 (LO Si, Ap Using the data in BE8.4, compute the markup percentage using absorption-cost C ompute markup p e rt enl,.t tt
absorption-cost p ricittg.
pricing.
"Blitt.ll (LO S), Ap Using the data in BE8.4, compute the markup percentage using variable-cost pricing. C ompute markup p e rc': rt! ti ;1 r
variable -cost pricin g.

DO lTl Exercises

DO lT! g.1 (LO f), Ap Yilmaz Water is considering introducing a water filtration device for its l-liter Determine tarqet cost

water bottles. Market research indicates that 1,000,000 units can be sold if the price is no more than f,
3. If yilmaz Water decides to produce the filters, it will need to invest 12,000,000 in new
production
equipment. Yilmaz Water requires a minimum rate of return of 16% on all investments.
' Determine the target cost per unit for the filter.
g.; tlse cost-pltts Pricing :t; t!r :,
DO lT! Ap Gangtok Ltd. produces area rugs. The following per unit cost information is
(LO 2),
various antoltnts.
available: direct materials f18, direct labor f,9, variable manufacturing overhead f,5, fixed manufac-
turing overhead f6, variable selling and administrative expenses f3, and flxed selling and adminis-
trative expenses f7.
Using a 30% markup on total per unit cost, compute the target selling price'

ft* lT! 8.3 (Lo 3), AP lliFfE Presented below are data relating to labor for Verde Appliance U se time-and-maleril! Pti
determine bill.
Repair Shop.
Repair-technicians' wages €110,000
Fringe benefits 40,000
Overhead 50,000

The desired profit margin per hour is €20. The material loading charge is 50% of invoice cost. Verde
estimates that 5,000 labor hours will be worked next year. If Verde repairs a dishwasher that takes i
I .5 hours to repair and uses parts of €70, compute the bill for the
job'
D ete rmine t ran sfe r pr i,
D0 lTl g.4 {LO 4}, Ap The fastener division of Guangming Fasteners manufactures zippers and then
per unit is
sells them to customers for Y80 per unit. Its variabie cost is Y30 per unit, and its fixed cost
y15. Management would iike the fastener division to transfer 12,000 of these zippers to another divi-
sion within the company at a price of Y30. The fastener division could avoid Y2 per zipper of
variable
packaging costs by selling internally.
Determine the minimum transfer price (a) assuming the fastener division is not operating at fu1l
capacity, and (b) assuming the fastener division is operating at fulI capacity'