Question

A manufacturer reports the following information on its product. Direct materials cost $ 43.00 per unit Direct labor cost $ 11.30 per unit Variable overhead cost $ 5.30 per unit Fixed overhead cost $ 1.30 per unit Target markup 30 % Compute the target selling price per unit under absorption costing

Answer 1

Answer:

Selling price= $79.17

Explanation:

Giving the following information:

Direct materials cost $43

Direct labor cost $11.30

Variable overhead cost $ 5.30

Fixed overhead cost $ 1.30

Target markup 30 %

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Unit product cost= 43 + 11.3 + 5.3 + 1.3= $60.9

Now, the selling price:

Selling price= 60.9*1.3

Selling price= $79.17