Question

c. What is the highest acceptable manufacturing cost Leno would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $25 per unit? (Assume target costing.) E8.4 (LO 2), AP Kaspar Corporation makes a commercial-grade cooking griddle. The following infor mation is available for Kaspar Corporation's anticipated annual volume of 30,000 units. Per Unit Total Direct materials $17 Direct labor $ 8 Variable manufacturing overhead $11 Fixed manufacturing overhead $300,000 Variable selling and administrative expenses $ 4 Fixed selling and administrative expenses $150,000 The company uses a 40% markup percentage on total cost. Instructions a. Compute the total cost per unit. b. Compute the target selling price. E8.5 (LO 2), AP Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national

just E. 8.4

Answer 1

Fixed manufacturing overhead per unit = Fixed manufacturing overhead/ Number of units

= 300,000/30,000

= $10

Fixed selling and administrative expense per unit = Fixed selling and administrative expense/ Number of units

= 150,000/30,000

= $5

Total cost per unit = Direct material + Direct Labor + Variable manufacturing overhead + Fixed manufacturing overhead + Variable selling and administrative expenses + Fixed selling and administrative expenses

= 17+8+11+10+4+5

= $55

b) Markup = 40% on total cost

= 55 x 40%

= $22

Target selling price = Total cost per unit + Markup

= 55+22

= $77

Kindly comment if you need further assistance. Thanks‼!