National Corporation needs to set a target price for its newly designed product M14–M16. The following data relate to this new product. Per Unit Total Direct materials $26 Direct labor $44 Variable manufacturing overhead $15 Fixed manufacturing overhead $1,377,000 Variable selling and administrative expenses $ 5 Fixed selling and administrative expenses $ 1,053,000 These costs are based on a budgeted volume of 81,000 units produced and sold each year. National uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 40%. Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14–M16.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
National Corporation needs to set a target price for its newly designed product M14–M16. The following data relate to this new product.
Per Unit Total
Direct materials $26
Direct labor $44
Variable manufacturing
Fixed manufacturing overhead $1,377,000
Variable selling and administrative expenses $ 5
Fixed selling and administrative expenses $ 1,053,000
These costs are based on a budgeted volume of 81,000 units produced and sold each year. National uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 40%.
Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14–M16.
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