Question

Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $19, direct labor $7, variable manufacturing overhead $2, fixed manufacturing overhead $4, variable selling and administrative expenses $5, and fixed selling and administrative expenses $7. Using a 30% markup on total per unit cost, compute the target selling price.

Answer 1

Answer:

$57.20

Explanation:

Total unit cost = $19 + $7 + $2 + $4 + $5 + $7 = $44

Target selling price = Total unit cost × (1  + Markup)

Since markup percentage is 30%, or 0.3, we therefore have:

Target selling price = $44 × (1 + 0.3) = $57.20

Therefore, the target selling price is $57.20.