Question

Lafleur Corporation needs to set a target price for its newly designed product, M14-M16. The following data relate to it: Total Per Unit $12 18 10 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $4,215,000 5 2,529,000 These costs are based on a budgeted volume of 281,000 units produced and sold each year. Lafleur uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 20%. Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14-M16. Total variable cost per unit Total fixed costs per unit Total cost per unit Calculate the desired markup per unit for M14-M16. (Round answer to 2 decimal places, e.g. 15.25.) Markup per unit $ Calculate the target selling price for M14-M16. (Round answer to 2 decimal places, e.g. 15.25.) Target selling price $ Assuming that 224,800 M14-M16s are produced during the year, calculate the variable cost per unit, fixed cost per unit, and total cost per unit. (Round answers to 2 decimal places, e.g. 15.25.) 0 Total variable cost per unit Total fixed costs per unit Total cost per unit

Answer 1

Answer to Part 1.

Variable Cost per Unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Variable Selling and Administrative Expenses
Total Variable Cost per Unit = $12 + $18 + $10 + $5
Total Variable Cost per Unit = $45

Total Fixed Costs = Fixed Manufacturing Overhead + Fixed Selling and Administrative Expenses
Total Fixed Costs = $4,215,000 + $2,529,000
Total Fixed Costs = $6,744,000

Total Fixed Cost per Unit = Total Fixed Costs / Units Produced
Total Fixed Cost per Unit = $6,744,000 / 281,000
Total Fixed Cost per Unit = $24

Total Cost per Unit = Total Variable Cost per Unit + Total Fixed Cost per Unit
Total Cost per Unit = $45 + $24
Total Cost per Unit = $69

Answer to Part 2.

Markup per Unit = Total Unit Cost * 20%
Markup per Unit = $69 * 20%
Markup per Unit = $13.80

Answer to Part 3.

Target Selling Price = Total Cost per Unit + Markup
Target Selling Price = $69 + $13.80
Target Selling Price = $82.80

Answer to Part 4.

Variable Cost per Unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Variable Selling and Administrative Expenses
Total Variable Cost per Unit = $12 + $18 + $10 + $5
Total Variable Cost per Unit = $45

Total Fixed Costs = Fixed Manufacturing Overhead + Fixed Selling and Administrative Expenses
Total Fixed Costs = $4,215,000 + $2,529,000
Total Fixed Costs = $6,744,000

Total Fixed Cost per Unit = Total Fixed Costs / Units Produced
Total Fixed Cost per Unit = $6,744,000 / 224,800
Total Fixed Cost per Unit = $30

Total Cost per Unit = Total Variable Cost per Unit + Total Fixed Cost per Unit
Total Cost per Unit = $45 + $30
Total Cost per Unit = $75