Question

Exercise 8-5 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 544,000 units. Per Unit Total $6.87 $10.77 $15.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $3,318,400 $14.04 $1,626,560 The company has a desired ROI of 23%. It has invested assets of $27,351,000. Compute the total cost per unit. (Round answer to 2 decimal places, e.g. 10.50.) Total cost per unit Compute the desired ROI per unit. (Round answer to 2 decimal places, e.g. 10.50.) Desired ROI per unit Compute the markup percentage using total cost per unit. (Round answer to 2 decimal places, e.g. 10.50.) Markup percentage using total cost per unit Compute the target selling price. (Round answer to 2 decimal places, e.g. 10.50.) Target selling price

Answer 1

a) Compute the total cost per unit.

= All variable costs per unit + All fixed costs per unit

= $6.87+ $10.77 + $15 + $ 14.04 +[ $3,318,400+$1,626,560]/544,000

= $ 46.68 +$ 9.09

=$ 55.77

b) Compute the desired ROI per unit.
($27,351,000 x 23%) / 544,000 = $11.56

c)Compute the markup percentage using total cost per unit.
11.56 / 55.77 = 20.73%

d)Compute the target selling price
55.77 x 120.73% = $67.33