Dewitt Corporation needs to set a target price for its newly designed product M14- M16. The following data relate to this new product.
|
Direct materials
|
Per Unit
$20
|
Total
|
|
Direct labor
|
$40
|
|
|
Variable manufacturing overhead
|
$10
|
|
|
Fixed manufacturing overhead
|
|
$1,440,000
|
|
Variable selling and administrative expenses
|
$ 5
|
|
|
Fixed selling and administrative expenses
|
|
$ 960,000
|
These costs are based on a budgeted volume of 80,000 units produced and sold each year. Dewitt uses cost-plus pricing methods to set its target selling price. The markup percent- age on total unit cost is 30%.
Instructions
(a) Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14-M16.
(b) Compute the desired ROI per unit for M14-M16.
(c) Compute the target selling price for M14-M16.
(d) Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,000 M14-M16s are sold during the year.
Attachment:- Problem Excel file.rar