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Messina Company wants to use absorption cost$-$plus pricing to establish the selling price for a new product. The company plans to invest $$650,000$ in operating assets that provide the capacity to make $30,000$ units. Its required return on investment $($ROI$)$ in its operating assets is $20\%.$ Messina's Accounting Department set a goal of producing and selling $20,000$ units during the new product's first year of availability. It also provided the following cost estimates for the new product:

Direct materials

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead

Variable selling and administrative expenses

Fixed selling and administrative expenses

Per Unit

$$12$

$$8$

$$3$

$$1$

$$100,000$

$$60,000$

Total

$$60,000$

Required:

If the company plans to produce and sell $20,000$ units, what is the absorption unit product cost for its new product? $($Round your answer to $2$ decimal places.$)$

At a planned sales volume of $20,000$ units, what is the markup percentage on absorption cost for the new product? $($Round your answer to $1$ decimal place.$)$

Using absorption cost$-$plus pricing and assuming a planned sales volume of $20,000$ units, what selling price would the company establish for its new product? $($Round intermediate calculations and final answer to $2$ decimal places.$)$

Using an absorption format, calculate Messina's net operating income if it actually produces and sells only $19,000$ units $($instead of $20,000$ units$)$ at the absorption cost$-$plus price from requirement $3.$ Calculate the return on investment $($ROI$)$ at this lower sales volume. $($Round your intermediate calculations to $2$ decimal places. Round final answer to $1$ decimal place.$)$

Assume that Messina's controller recommends raising the new product's selling price in an effort to achieve the desired ROI at the lower sales volume of $19,000$ units.

a$)$ What would become the new markup percentage? $($Round your intermediate calculations to $2$ decimal places. Round final answer to $1$ decimal place.$)$

b$)$ What would become the new selling price? $($Round your intermediate percent to $1$ decimal place. Round other intermediate calculations and final answer to $2$ decimal places.$)$

$\backslash$table$[[1.$ Unit product cost,$$,28\mathrm{.}00,],[2.$ Markup percentage on absorption cost$,,,\%$

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