Question
National Corporation needs to set a target price for its newly designed product M14M16. The following data relate to this new product. Per Unit Total
National Corporation needs to set a target price for its newly designed product M14M16. The following data relate to this new product.
Per Unit | Total | |||||
---|---|---|---|---|---|---|
Direct materials | $28 | |||||
Direct labor | $43 | |||||
Variable manufacturing overhead | $15 | |||||
Fixed manufacturing overhead | $1,200,000 | |||||
Variable selling and administrative expenses | $ 4 | |||||
Fixed selling and administrative expenses | $ 1,200,000 |
These costs are based on a budgeted volume of 80,000 units produced and sold each year. National uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 40%.
a. Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14M16.
Variable cost per unit | $enter a dollar amount | ||
---|---|---|---|
Fixed cost per unit | enter a dollar amount | ||
Total cost per unit | $enter a total of the two previous amounts |
b. Compute the desired ROI per unit for M14M16.
Desired ROI | $enter the desired ROI per unit in dollars | per unit |
c. Compute the target selling price for M14M16.
Target selling price per unit | $ |
d. Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,000 M14M16s are produced and sold during the year.
Variable cost per unit | $ | ||
---|---|---|---|
Fixed cost per unit | $ | ||
Total cost per unit | $ |
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