Kaspar Corporation makes a commercial-grade cooking griddle. The following infor
ID: 2529930 • Letter: K
Question
Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 30,000 units.
The company uses a 40% markup percentage on total cost.
(a)Compute the total cost per unit.
(B) Compute the target selling price.
Per Unit Total Direct materials $ 17 Direct labor $ 8 Variable manufacturing overhead $ 11 Fixed manufacturing overhead $ 300000 Variable selling and administrative expenses $ 4 Fixed selling and administrative expenses $ 150000Explanation / Answer
a Direct materials $ 17 Direct labor $ 8 Variable manufacturing overhead $ 11 Variable selling and administrative expenses $ 4 TOTAL VARIABLE COST 40 PER UNIT Fixed manufacturing overhead $ 300000 Fixed selling and administrative expenses $ 150000 TOTAL FIXED COST 450000 NO. OF UNITS 30000 FIXED COST PER UNIT 450000/30000 15 VARIABLE COST PER UNIT 40 TOTAL COST PER UNIT 55 DESIRED ROI 40% 22 b TARGET SELLING PRICE 55+22 77
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