Question

BE21.2 (LO 2) Mussatto Corporation produces snowboards. The following per unit cost information is available: direct materials $12, direct labor $8, variable manufacturing overhead $6, fixed manufactur- ing overhead $14, variable selling and administrative expenses $4, and fixed selling and administrative expenses $12. Using a 30% markup percentage on total per unit cost, compute the target selling price.

Answer 1

Solution 21.2 Computation of Target Selling Price of Mussatto Corporation Particulars Amount Direct Materials 12.00 Direct Labour 8.00 $ Variable Manufactruing OHs 6.00 $ Variable Selling & Admin OHs 4.00 $ Fixed Manufacturing OHs 14.00 $ Fixed Selling & Admin OHs 12.00 Total Cost 56.00 Mark up @30% ($56 x 30%) $ 16.80 Target Selling Price 72.80 Solution 21.4 Computation of Markup % of Morales Corporation Particulars Amount Direct Materials 36.00 $ Direct Labour 24.00 Variable Manufactruing OHs 18.00 $ Variable Selling & Admin OHs 14.00 $ Fixed Manufacturing OHs 40.00 $ Fixed Selling & Admin OHs 28.00 $ 160.00 Total Cost (a) $ ROI per unit (Markup) (b) 30.00 (b/a x100) Markup % on Total Cost 18.75%

Solution 21.6 Computation of total Bill of Rooney Particulars Amount Repair charges ($42 x 10.5 hours Material Loading % ($700 x 40%) Total Bill (Service) $441.00 $280.00 $ 721.00 If Material Cost is also to be included in Bill Particulars Amount Repair charges ($42 x 10.5 hours Material Loading % ($700 x 40%) $ 441.00 $ 280.00 $ 721.00 $ 700.00 Total Service Value Material Used (including materials) $1,421.00 Total Bill Solution 21.7 Current Contribution per unit of Heating Division Particulars Amount $ Selling price 45.00 $ less: Variable costs 25.00 Contribution per unit 20.00 As the Heating Division is operating at full capacity, Minimum Transfer price Variable cost Contribution lost per unit $25+ $20 $ 45.00

In case of any doubt, please comment below