Josh Corporation produces industrial robots for high-precision manufacturing. Th
ID: 2346870 • Letter: J
Question
Josh Corporation produces industrial robots for high-precision manufacturing. The following information is given for the Corporation.Per Unit Total
Direct materials -$380
Direct labor -$290
Variable manufacturing overhead- $72
Fixed manufacturing overhead ------------- $1,800,000
Variable selling and administrative expenses -$55
Fixed selling and administrative expenses----------- $327,000
The company has a desired ROI of 20%. It has invested assets of $49,600,000. It anticipates production of 3,000 units per year.
1.Compute the cost per unit of the fixed manufacturing overhead and the fixed selling and administrative expenses. (Round answers to 0 decimal places.)
2.Compute the desired ROI per unit. (Round answers to 0 decimal places.)
3.Compute the target selling price.
Explanation / Answer
a )Fixed manufacturing overhead $600
Fixed selling and administrative expenses $109
Fixed manufacturing overhead per unit = $1,800,000/3000 units = $600 per unit
Fixed selling and administrative expenses = $327,000/3000 units = $109 per unit
b) Total desired ROI = Invested assets x Desired ROI % = $49,600,000 x 20% = $9,920,000
Desired ROI per unit = Total desired ROI/Number of units = $9,920,000/3000 = 3306.67 = $3,307 (rounded)
c) Total cost per unit = $380 + $290 + $72 + $600 + $55 + $109 = $1,506 per unit
Target selling price = Total cost per unit + Desired ROI per unit = $1,506 + $3,307 = $4,813 per unit
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