Question
(make or buy) Coyote Company incurs the following costs in producing 10,000 covers. Direct material costs $10,000 Direct labor costs $50,000 Variable manufacturing overhead $40,000
(make or buy) Coyote Company incurs the following costs in producing 10,000 covers. Direct material costs $10,000 Direct labor costs $50,000 Variable manufacturing overhead $40,000 Fixed manufacturing overhead $20,000 Total manufacturing costs $120,000 If Coyote buys them, the purchasing cost would be $ 11/unit, and Coyote has to assume $16,000 of fixed manufacturing overhead. Instructions: 1. Prepare an analysis showing Coyote should make or buy the covers. 2. Provide a recommendation. P4. (cost-plus pricing) Coyote corporation produces air purifiers. The following per unit cost information is available: direct materials $15, direct labor $10, variable manufacturing overhead $5, and variable selling and administrative expenses $15. Fixed selling and administrative expenses are $100,000, and fixed manufacturing overhead is $160,000. Instructions: 1. Using a 40% markup percentage on the total cost per unit and assuming 20,000 units, compute the target selling price. 2. Using a 50% markup percentage on the total cost per unit and assuming 10,000 units, compute the target selling price.
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