Financlal i Lovel Computer Parts Inc. is in the proc of ettinga seling prioe on

Question

Financlal i Lovel Computer Parts Inc. is in the proc of ettinga seling prioe on a new component it has just designed and developed. The folilewing cost Direct lsbor s 23 Vanabie seling and admnistrave expenses $22 t 441,000 Lovel Computer Perts menagement requests thet the total cost per unit be used in cost-pkus pridng ts products. On this particular product (a) Your anawer is comet Compute the mario percentage target seling price that will alow Lovee Computer Parts to oarn is desred R01 of 20 companent. (Round annwers to 2 deimal slbces ng. 10.50.) on this new Terget selling price MacBook A :

Explanation / Answer

first let us calculate the total cost per unit:

total markup = $1,269,000 *20% =>$253,800.

markup per unit = $253800 / 43,900

=>$5.78.

markup percentage = $5.78 / $139.44*100 =>4.15%.....(rounded to two decimals)

target selling price = ($139.44 +$5.78)=>$145.22........(rounded to two decimals)

Direct materials $49 Direct labour $22 Variable manufacturing overhead $23 Fixed manufacturing ($588,000 / 43,900) $13.39 variable selling and administrative expenses $22 fixed selling and administrative expenses ($441,000 / 43,900) $10.05 Total cost per uniit $139.44

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