The following data pertain to Lawn Master Corporation’s top-of-the-line lawn mower.
Variable manufacturing cost | $250 |
Applied fixed manufacturing cost | 50 |
Variable selling and administrative cost | 60 |
Allocated fixed selling and administrative cost | ? |
To achieve a target price of $450 per lawn mower, the markup percentage is 12.5 percent on total unit cost.
Required:
1. What is the fixed selling and administrative cost allocated to each unit of Lawn Master’s top-of-the-line mower?
2. For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $450 per mower: (a) variable manufacturing cost. (b)absorption manufacturing cost, and (c) total variable cost.
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