Problem 21-01A

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		$24
Direct labor		$37
Variable manufacturing overhead		$12
Fixed manufacturing overhead					$1,458,000
Variable selling and administrative expenses		$ 7
Fixed selling and administrative expenses					$ 972,000

These costs are based on a budgeted volume of 81,000 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%.

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

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Compute the desired ROI per unit for M14M16.

Desired ROI

$enter the desired ROI per unit in dollars

per unit

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Compute the target selling price for M14M16.

Target selling price per unit

$enter the target selling price per unit in dollars

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Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,750 M14M16s are produced and sold during the year.

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

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