The management of Matsuura Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: Management plans to produce and sell 1,000 units of the new product annually. The new product would require an investment of $254,000 and has a required return on investment of 10%.
-The absorption costing unit product cost is:
A) $90
B) $97
C) $67
D) $69

Question

The management of Matsuura Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product:  Management plans to produce and sell 1,000 units of the new product annually. The new product would require an investment of $254,000 and has a required return on investment of 10%.
-The absorption costing unit product cost is:
A) $90 
B) $97 
C) $67 
D) $69

Quizplus · Accepted Answer

Absorption costing unit product cost includes all manufacturing costs, both variable and fixed. In this case, the unit product cost is $90, which includes $23 of variable manufacturing costs and $67 of fixed manufacturing costs.

The Management of Matsuura Corporation Would Like to Set the Selling