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
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
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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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
Selling . 15
Fixed Costs (in total)
Overhead $670,000
Selling . 305,000
Administrative . 285,000
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