Question
Wamser Corporation needs to set a target price for its newly designed product, E2-D2. The following data relate to it: Direct materials per unit $15
Wamser Corporation needs to set a target price for its newly designed product, E2-D2. The following data relate to it:
Direct materials | per unit $15 | total costs |
Direct labour | 25 |
|
Variable manufacturing overhead | 14 |
|
Fixed manufacturing overhead |
| $4,000,000 |
Variable selling and administrative expenses | 12 |
|
Fixed selling and administrative expenses |
| 2,000,000 |
These costs are based on a budgeted volume of 1 million units produced and sold each year. Wamser uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 25%. Instructions
a. Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for E2-D2. Variable cost per unit = $66
b. Calculate the desired ROI per unit for E2-D2.
c. Calculate the target selling price for E2-D2. d. Calculate the variable cost per unit, fixed cost per unit, and total cost per unit, assuming that 800,000 E2-D2s are produced during the year. (Round to two decimal places.)
Please provide clear detailed steps. Will like if correct!
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