Gonzales Corp. needs to set a target price for its newly designed product EverReady. The following data relate to this product. Per Unit Total Direct Material $20 Direct Labor $40 Variable manufacturing Overhead $10 Fixed manufacturing overhead $1,200,000 Variable selling and administrative $5 Fixed selling and administrative $1,120,000 The costs shown above are based on a budgeted volume of 80,000 units produced and sold each year. Gonzales uses cost-plus pricing methods to set its target selling price. Because some managers prefer absorption-cost pricing and others prefer variable-cost pricing, the accounting department provides information under both approaches using a markup of 50% on absorption cost and a markup of 70% on variable cost. Instruction : Compute the target price for one unit of EverReady using variable-cost pricing
Gonzales Corp. needs to set a target price for its newly designed product EverReady. The following data relate to this product.
Per Unit Total
Direct Material $20
Direct Labor $40
Variable manufacturing
Fixed manufacturing overhead $1,200,000
Variable selling and administrative $5
Fixed selling and administrative $1,120,000
The costs shown above are based on a budgeted volume of 80,000 units produced and sold each year. Gonzales uses cost-plus pricing methods to set its target selling price. Because some managers prefer absorption-cost pricing and others prefer variable-cost pricing, the accounting department provides information under both approaches using a markup of 50% on absorption cost and a markup of 70% on variable cost.
Instruction :
- Compute the target price for one unit of EverReady using variable-cost pricing
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