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 absorption-cost pricing

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 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 :

  1. Compute the target price for one unit of EverReady using absorption-cost pricing

thanks in advance :) 

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