Question

ABC Limited manufactures high quality copper pots and pans.

Company's management accountant is involved in setting price for
the company's new Starter Set. This set consist of seven of the most
commonly used pots and pan. During the next year, the company
plans to manufacturer 10,000 Starter Sets. The management
accountant gathered the following information regarding the cost of
developing 10,000 Starter Set. Variable Costs: Manufacturing
$75,000 Sales Commission $15,000 Total Variable Cost $90,000 Fixed
Cost Allocated Manufacturing $25,000 Total Fixed Cost $25,000 Total
Cost $115,000
Management decided that the required markup is 40%.
I
1. What is the management accountant's role in setting price of a
new product?

Answer 1

ABC Limited

The role of the management accountant in setting the price of a new product is to gather sufficient information especially cost data and competitor's prices. The management accountant ensures that accurate computations are made to enable a proper price to be set.

Step-by-step explanation:

a) Data and Calculations:

Variable Costs:

Manufacturing $75,000

Sales Commission $15,000

Total Variable Cost $90,000

Fixed Cost

Allocated Manufacturing $25,000

Total Fixed Cost $25,000

Total Cost $115,000

Units of production = 10,000

Unit cost = $11.50

Management decided that the required markup is 40%

Selling price = $16.10 ($11.50 * 1.4)