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Johnston Corporation makes a product with the following costs: Direct Materials $14.90 per unit Direct Labor 14.10 per unit Variable Manufacturing Overhead 3.70 per unit
Johnston Corporation makes a product with the following costs: Direct Materials $14.90 per unit Direct Labor 14.10 per unit Variable Manufacturing Overhead 3.70 per unit Fixed Manufacturing Overhead - Fixed $305,200 Variable Selling & Administrative expenses $3.00 per unit Selling & Administrative Expenses $163,800 The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 14,000 units per year. The company has invested $540,000 in this product and expects a return on investment of 10%. Required: a. Calculate the unit product cost [8 marks] b. Compute the markup required to achieve the desired ROI [8 marks] c. Compute the target selling price to achieve desired profit [6 marks]
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