Question
The following information is available for a product manufactured by Gordon Corporation: Per Unit Total Direct materials $62.50 Direct labour 47.50 Variable manufacturing overhead 15.00
The following information is available for a product manufactured by Gordon Corporation: Per Unit Total Direct materials $62.50 Direct labour 47.50 Variable manufacturing overhead 15.00 Fixed manufacturing overhead $250,000 Variable selling and admin. expenses 10.00 Fixed selling and admin. expenses 55,000 Gordon has a desired ROI of 16%. It has invested assets of $8,250,000 and expects to produce 2,000 units per year. Instructions Calculate each of the following: a) Cost per unit of fixed manufacturing overhead and fixed selling and administrative expenses (2 marks). Fixed manufacturing overhead = ______/unit Fixed SGA expense = _______/unit b) Desired ROI per unit (2 marks). Desired ROI = _______/unit c) Markup percentage using the absorption-cost approach (2 marks). Absorption-cost makeup percentage = __________% d) Markup percentage using the variable cost-plus approach (2 marks). Variable cost-plus makeup percentage = __________%
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