Google wants to develop a laptop to compete with Apple’s MacBook Pro. Google believes the price of this model must be no more than Apple’s price of $1,199 per unit to be competitive. Google expects to sell 20,000 units of this laptop model and has a target markup percentage of 25%. Assumed data for Google follow. Google uses the total cost method in setting its laptop price.

Required

1. Compute Google’s total cost per unit if 20,000 units are produced.
2. Determine Google’s dollar markup per unit.
3. Determine Google’s selling price per unit.

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Variable costs Per unit Fixed costs Annual total Direct materials.... Direct labor... $490 Overhead ... $2,500,000 60 Selling, general, and administrative.. 1,500,000 Overhead 140 Selling, general, and administrative .... 10