Question

QS 23-16 Product pricing LO P6 Garcia Co. sells snowboards. Each snowboard requires direct materials of $122, direct labor of $52, and variable overhead of $67. The company expects fixed overhead costs of $679,000 and fixed selling and administrative costs of $114,000 for the next year. It expects to produce and sell 12,200 snowboards in the next year. What will be the selling price per unit if Garcia uses a markup of 10% of total cost

Answer 1

Answer:

Selling price= $336.6

Explanation:

Giving the following information:

Variable costs:

direct materials= $122

direct labor= $52

variable overhead= $67

Total unitary variable cost= $241

Total fixed costs= 679,000 + 114,000= $793,000

First, we need to calculate the total unitary cost:

Total unitary cost= (793,000/12,200) + 241

Total unitary cost= $306

Now, the selling price:

Selling price= 306*1.1

Selling price= $336.6