GIVEN: Kann Corporation produces industrial robots for high-precision manufactur

Question

GIVEN: Kann Corporation produces industrial robots for high-precision manufacturing. The following information is available:

Per Unit Total

Direct materials $25.00

Direct labor $10.00

Variable manufacturing overhead $6.00

Fixed manufacturing overhead $36,000

Variable selling and administrative costs $4.00

Fixed selling and administrative costs $15,000

The company has a desired ROI of 20%. It has invested assets of $420,000. It anticipates making and selling 3,000 units per year.

REQUIRED:

Part 1: Using the total (full) cost concept, determine the (a) unit cost amount; (b) markup percentage; and (c) unit target selling price.

Part 2: Using the product (absorption) cost concept, determine the (a) unit cost amount; and (b) markup percentage.

Part 3: Using the variable cost concept, determine the (a) unit cost amount; and (b) markup percentage.

Part 4: What is the target unit selling price under the three cost assumptions?

Part 5: What else should be considered when setting the product's selling price?

Part 6: Which of the three costing concepts would be most appropriate in each of the following situations? 1. External reporting for GAAP 2. Normal (long-run) pricing 3. Evaluating special orders

Part 7: Kann Corporation received a special order for 500 robots at $50 each from a foreign customer. Acceptance of the order would increase variable selling costs by $1.70 per unit because of shipping costs, but would not increase fixed costs or interfere with any current orders. Prepare a differential analysis to determine whether the special order should be accepted or not.

My school has no tutors for this; I will post what little I have, and attempt more myself, but I really do not know what I'm doing. I do not know how these figures that I have were determined:

Full cost for 3000 units Absorption cost for 3000 units Variable costs for 3000 units Direct materials $75,000 $75,000 $75,000 Direct labor 30,000 30,000 30,000 Variable manufacturing overhead 18,000 18,000 18,000 Fixed manufacturing overhead 36,000 36,000 Variable selling overhead 12,000 12,000 Fixed selling overhead 15,000 Total cost 186,000 159,000 135,000 Cost per unit 62 53 45 Desired profit = 42,000 * 20% 84,000 84,000 84,000 Sales value 270,000 243,000 219,000 Sales price per unit 90 81 73

Explanation / Answer

Answer: Part1,Part2, Part 3,Part 4.

Full cost Absorption costing Variable costing units 3000 3000 3000 Particulars Cost per unit Amount Cost per unit Amount Cost per unit Amount Direct material 25 75000 25 75000 25 75000 Direct Labor 10 30000 10 30000 10 30000 Variable manufacturing overhead 6 18000 6 18000 6 18000 Fixed manufacturing overhead 12 36000 12 36000 0 Variable selling overhead 4 12000 0 4 12000 Fixed selling overhead 5 15000 0 0 Total cost 62 186000 53 159000 45 135000 Investment 420000 420000 420000 ROI 20% 20% 20% Desired Profit 28 84000 28 84000 28 84000 Sales (total cost +Desired profit) 90 270000 81 243000 73 219000 Markup % 45.16% 52.83% 62.22%

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