Question

Exercise 22-5 Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 536,000 units. Per Unit Total Direct materials 7.09 Direct labor 11.20 14.94 $ 3,371,440 Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 14.17 $ 1,709,840 The company has a desired ROI of 27 %. It has invested assets of $ 27,207,000. Compute the total cost per unit. (Round answer to 2 decimal places, e.g. 10.50.) Total cost per units

Answer 1

* Total number of units = 536,000 units Variable costs per unit are as follows:- Direct Material 7.09 Direct Labour 11.2 Variable mft overhead 14.94 Variable selling exp 14.17 TOTAL VARIABLE COST 47.4 Fixed Overhead per unit calculation:- Fixed mft overhead 33,71,440 Fixed Selling exp 17,09,840 TOTAL FIXED COST 50,81,280 Fixed Cost per unit = 50,81,280 / 536,000 units Fixed Cost per unit = $ 9.48 * TOTAL COST PER UNIT = Variable Cost + Fixed Cost TOTAL COST PER UNIT = 47.4 +9.48 TOTAL COST PER UNIT = $ 56.88 * Return on Investment = 27% of 27,207,000 Return on Investment = $ 73,45,890 ROI per unit = 73,45,890 / 536,000 ROI per unit = $ 13.705, ie, $ 13.71 * Target Selling Price = Total Cost + ROI per unit Target Selling Price = 56.88 + 13.71 Target Selling Price = $ 70.59 * Mark up % on Total Cost = 13.71 / 56.88 = 24.10% Mark up % on Selling Price = 13.71 / 70.59 = 19.42%