Question

A company has sales of 400,000 units and the following financial information: Total Per Unit Direct materials $32 Direct labo
The company also has a desired ROI of 20%. It has invested assets of $120,000,000 What is the total cost per unit? Select one
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Answer #1

Answer

Sales = 400,000 units

Direct material per unit = $32

Direct labour per unit = $54

Variable manufacturing overhead per unit = $72

Fixed manufacturing overhead per unit

= 12,000,000 / 400,000 = $30

Variable selling and administrative expenses = $34

Fixed selling and administrative expenses

= 7,200,000 / 400,000 = $18

Total cost per unit

= 32 + 54 + 72 + 30 + 34 + 18 = $240

Total cost per unit is $240

Option b $240 is CORRECT.

The above calculations clearly show that other options are not correct.

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