B D 1 Question 1: Cost Plus Pricing - Total Cost (9 marks) 2 Shoes R Us is setting a target selling price for its new running shoe. The following data relate to it: 3 un 8 Per unit Total 4 15 5 $ Direct Materials 6 Direct Labour $ 20 7 Variable manufacturing overhead $ 10 8 Fixed manufacturing overhead $ 3,500,000 9 Variable selling and administrative expenses $ 10 Fixed selling and administrative expenses $ 2,000,000 11 12 Budgeted Volume of Units 250,000 13 Mark up on Total Unit Cost 10% 14 15 Required (round all answers to two decimal points): 16 17 a. Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit: (3 marks) 18 19 Total Variable Cost per Unit 20 Total Fixed Cost per Unit 21 Total Cost per Unit 22 23 b. Calculate the desired markup per unit in dollars. (2 marks) 25 Markup per unit ($) 26 27 c. Calculate the target selling price. (1 mark) 28 29 Target selling price 30 d. Shoes R Us has considered the cost per unit and the desired profit per unit when estabishing the selling price. What other factor do they need to consider when 51 setting a selling price for their new shoe? (1 mark) 82 3 4 e. It the number of units decreases to 225,000 units, will the sellling price increase or decrease? Explain why this would occur. (2 marks) 6