Question
Tidewater Company uses the product cost concept of applying the cost-plus approach to product pricing. The cost and expenses of producing and selling 50,000 units
Tidewater Company uses the product cost concept of applying the cost-plus approach to product pricing. The cost and expenses of producing and selling 50,000 units of Product K are as follows:
Variable costs: |
|
Direct materials | $ 5.00 |
Direct labor | 8.50 |
Factory overhead | 2.50 |
Selling and administrative expenses | 1.00 |
Total | $ 17.00 |
|
|
Fixed costs: |
|
Factory overhead | $50,000 |
Selling and administrative expenses | 34,000 |
Tidewater desires a profit equal to a 10% rate of return on invested assets of $1,285,000.
(a) | Determine the amount of desired profit from the production and sale of Product K. |
(b) | Determine the total manufacturing costs and the cost amount per unit for the production and sale of 50,000 units of Product K. |
(c) | Determine the markup percentage for Product K. |
(d) | Determine the selling price of Product K. |
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