Question

The following data pertain to Ronaldo Enterprises: Variable manufacturing cost $ 88 Variable selling and administrative cost 38 Applied fixed manufacturing cost 58 Allocated fixed selling and administrative cost 33 What price will the company charge if the firm uses cost-plus pricing based on absorption manufacturing cost and a markup percentage of 146%?

Answer 1

The price charged by Ronaldo Enterprises, using cost-plus pricing based on absorption manufacturing cost and a markup percentage of 146%, would be $359.16.

Step-by-step explanation:

The question pertains to cost-plus pricing and calculating the appropriate price for a product based on the absorption manufacturing cost and a specified markup percentage.

To find out the price the company will charge, one needs to first determine the absorption manufacturing cost, which is the sum of the variable manufacturing cost and applied fixed manufacturing cost.

Here is the breakdown:

Variable manufacturing cost: $88

• Applied fixed manufacturing cost: $58

The absorption manufacturing cost is calculated as follows:

Absorption manufacturing cost = Variable manufacturing cost + Applied fixed manufacturing cost = $88 + $58 = $146

Then, we apply the markup percentage to the absorption manufacturing cost:

Price = Absorption manufacturing cost × (1 + Markup percentage)

Price = $146 × (1 + 146%)

Price = $146 × 2.46 = $359.16

Therefore, at a markup of 146%, the price charged by Ronaldo Enterprises would be $359.16.