Cheyenne Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $42 $54 $12 $7 Total $1,267,200 $844,800 These costs are based on a budgeted volume of 70,400 units produced and sold each year, Cheyenne uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 40%.

Cheyenne Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $42 $54 $12 $7 Total $1,267,200 $844,800 These costs are based on a budgeted volume of 70,400 units produced and sold each year, Cheyenne uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 40%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Oo.188.

Subject :- Account

Cheyenne Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new
product.
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
Per Unit
$42
$54
$12
$7
Total
$1,267,200
$844,800
These costs are based on a budgeted volume of 70,400 units produced and sold each year. Cheyenne uses cost-plus pricing methods to
set its target selling price. The markup percentage on total unit cost is 40%.

Compute unit variable cost, unit fixed cost, and unit total cost assuming that 52,800 M14-M16s are produced and sold during the
year.
Variable cost per unit
Fixed cost per unit
Total cost per unit
$
$
115
30
145

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