Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 20,000 units follow. The company targets a profit of $300,000 on this product. 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. 3. Compute the product’s selling price using the variable cost method. Variable Costs per Unit Direct materials $70 Direct labor . 40 Overhead 25 Selling . 15 Fixed Costs (in total) Overhead $670,000 Selling . 305,000 Administrative . 285,000

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