1) Variable cost per unit= Direct materials+Direct labor+Variable manufacturing overhead+Variable selling and administrative expenses
= $35+24+18+13= $90
Fixed cost per unit= Fixed manufacturing overhead+Fixed selling and administrative expenses
= $52+27= $79
Variable costing markup percentage= (Desired ROI+Fixed cost per unit)*100/Variable cost per unit
= ($20+79)*100/90
= 110%
2) Calculation of total cost per unit
Direct materials | $19 |
Direct labor | 9 |
Variable manufacturing overhead | 17 |
Fixed manufacturing overhead ($383500/29500) | 13 |
Variable selling and administrative expenses | 4 |
Fixed selling and administrative expenses ($88500/29500) | 3 |
Total cost per unit | $65 |
Calculation of Target selling price
Target selling price= Total cost+(Total cost per unit*Mark up percentage)
= $65+(65*40%)
= $91 per unit
3) Variable cost per unit= Direct materials+Direct labor+Variable manufacturing overhead+Variable selling and administrative expenses
= $16+23+11+10= $60
Fixed cost per unit= Fixed manufacturing overhead+Fixed selling and administrative expenses
= $30+17= $47
Variable costing markup percentage= (Desired ROI+Fixed cost per unit)*100/Variable cost per unit
= ($25+47)*100/60
= 120%
Morales Corporation produces microwave ovens. The following per unit cost information is available: direct materials $35,...
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