Question
5) Michigan Company has budgeted the following costs for the production of its only product: Direct Materials $35,000 Direct Labor 25,000 Variable indirect production costs
5) Michigan Company has budgeted the following costs for the production of its only product:
Direct Materials $35,000
Direct Labor 25,000
Variable indirect production costs 30,000
Fixed indirect production costs 15,000
Variable selling and administrative costs 7,500
Fixed selling and administrative costs 12,500
Total Costs $125,000
Michigan Company wants a profit of $50,000, and expects to produce 1,000 units. The market price is $150 per unit. What is the target cost per unit of the product?
A) $100 per unit (this is the right answer) PLEASE EXPLAIN WHY
B) $125 per unit
C) $150 per unit
D) $175 per unit
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