FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 absorption-cost pricing
thanks in advance :)
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