P3. (make or buy) DD Company incurs the following costs in producing 10,000 covers.

Direct material costs $20,000

Direct labor costs $50,000

Variable manufacturing overhead $30,000

Fixed manufacturing overhead $40,000

Total manufacturing costs $140,000

Manufacturing costs / unit = $100,000 / 10,000 units = $14

If DD buys them, the purchasing cost would be $ 12/unit, and DD has to assume $26,000 of fixed manufacturing overhead.

Instruction) Prepare an analysis showing DD should make or buy the covers. And provide a recommendation.

P4. (cost-plus pricing) DD corporation produces air purifiers. The following per unit cost information is available: direct materials $10, direct labor $20, variable manufacturing overhead $25, variable selling and administrative expenses $15. Fixed selling and administrative expenses are $200,000, and fixed manufacturing overhead is $100,000.

Instructions:

1. Using a 40% markup percentage on the total cost per unit and assuming 10,000 units, compute the target selling price.

2. Using a 50% markup percentage on the total cost per unit and assuming 20,000 units, compute the target selling price.