Kaspar Corporation makes a commercial-grade cooking griddle. The following infor
ID: 2479950 • Letter: K
Question
Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 26,700 units.
The company uses a 41% markup percentage on total cost.
Compute the total cost per unit.
Total cost per unit $____________________
Per Unit Total Direct materials $20 Direct labor $6 Variable manufacturing overhead $14 Fixed manufacturing overhead $453,900 Variable selling and administrative expenses $5 Fixed selling and administrative expenses $186,900Explanation / Answer
Fixed manufacturing overhead per unit = Total fixed manufacturing overhead / Number of units
= $453,900 / 26,700 = $17 per unit
Fixed selling and administrative expenses per unit = Total Fixed selling and administrative expenses / Number of units
= $186,900 / 26,700 = $7 per unit.
So, Total cost per unit = Direct material + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead + Variable selling expenses + Fixed selling expenses
= $20 + $6 + $14 + $17 + $5 + $7 = $69 per unit.
So, Total cost per unit is $69
Markup = 41% of total cost = $69 x 41% = $28.29
So, total selling price per unit = Cost per unit + Markup = $69 + $28.29 = $97.29 per unit.
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