QUESTION 4 (2.0 MARKS) The following anticipated data are for the next year of operations: Per unit

($) 20

Direct material cost: ($) 20

Direct labor cost: 10

Variable production overhead 10

Variable nonproduction overhead 5

They are estimated the fixed production overhead; fixed nonproduction overhead of 5'mil 0.9 and 5'mil 0.1 respectively. There is no opening inventory; budgeted production and sales volume is 120,000 units.

Requirements:

1. Compute product cost under absorption costing and unit selling price if the markup percentage is 50% of product cost. (1.0 mark)

2. If the company want to achieve target net income of $'mil 3.6, how many percentages of margin on variable cost should be applied? (1.0 mark)