Question

"The following per unit cost information is available: direct materials $10, direct labor $4, variable manufacturing overhead $3, fixed manufacturing overhead $10, variable selling and administrative expenses $1, and fixed selling and administrative expenses $8. Using a 25% markup percentage on total per unit cost, compute the target selling price."

Answer 1

Answer:

The target selling price =$45  

Explanation:

The target selling price is the sum of the total unit cost plus 25% of the the unit cost

The target selling price = Total per unit cost + (25% × total unit cost)

The total unit cost is the sum of all the costs involved making the product available to the consumer.

The sum of direct material cost , labour cost variable manufacturing, fixed manufacturing overhead, variable selling and administrative expenses and fixed selling and administrative expenses.

The target selling price would be determined using te steps below:

Step 1: Calculate the unit cost

Total unit cost = 10 + 4 + 3 + 10 + 1 + 8 = 36  

Total unit cost = $36

Step 2: Calculate the target selling price

Target selling price = Unit cost + (25%× unit cost)

The target selling price = 36 + (25% × 36) = $45  

The target selling price =$45