Steeze Co. makes snowboards and uses the total cost approach in setting product

Question

Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 13,500 units follow. The company targets a profit of $388,800 on this product. Variable Costs per Unit Fixed Costs 107 Overhead Direct materials Direct labor Overhead Selling $477,000e 105,000 309,000 32 Selling 27 Administrative 1. Compute the total cost per unit. 2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.) 3. Compute the product's selling price using the total cost method. Total cost per unit 2.Markup percentage 3. Selling price

Explanation / Answer

1 Variable expense Per unit Amount Direct material 107 1444500 Direct labor 32 432000 Overheads 27 364500 Selling 8 108000 Total variable expense 174 2349000 Fixed cost Overhead 477000 Selling 105000 Administrative 309000 total fixed cost 891000 Total cost 240 3240000 Total cost per unit 240 2 Total cost 3240000 Profit expected 388800 Sales amount 3628800 Markup percentage = 388800/3628800 10.7% 3 Sales amount 3628800 Units sold 13500 Selling price (3628800/13500) 268.8

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