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Green Gables Company makes a product that has the following costs: Per year Per unit $17.30 Direct materials Direct labour 12.90 Variable manufacturing overhead Fixed
Green Gables Company makes a product that has the following costs: Per year Per unit $17.30 Direct materials Direct labour 12.90 Variable manufacturing overhead Fixed manufacturing overhead Variable SG&A expenses 4.20 $916,800 2.00 Fixed SG&A expenses 907,200 The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 48,000 units per year. The company has invested $360,000 in this product and expects a return on investment of 15%. Required: on absorption cost 1) Compute the markup 2) Compute the target selling price of the product using the absorption costing approach
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