Question

Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated...

Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 25,900 units.

Per Unit Total
Direct materials $18
Direct labor $8
Variable manufacturing overhead $14
Fixed manufacturing overhead $414,400
Variable selling and administrative expenses $7
Fixed selling and administrative expenses $51,800


The company uses a 40% markup percentage on total cost.

1. Compute Total Cost Per Unit

2.Compute desired ROI per unit

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Answer #1

1) Total Cost per unit

Variable cost per unit (18+8+14+7) 47
Fixed cost per unit (414400+51800)/25900 18
Total cost per unit 65

2) Desired ROI per unit = 65*40% = 26

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