Question

Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $15, direct labor $9, variable manufacturing overhead $6, fixed manufacturing overhead $8, variable selling and administrative expenses $4, and fixed selling and administrative expenses $6. Using a 40% markup on total per unit cost, compute the target selling price.

Answer 1

$67.2

Step-by-step explanation:

With regards to the above,

Total unit cost = $15 + $9 + $6 + $8 + $4 + $6 = $48

Target selling price = Total unit cost × (1 + mark up)

Since markup percentage is 40% or 0.40

Therefore,

Target selling price = $48 × (1 + 0.4)

= $48 × 1.4

= $67.2

Therefore the target selling price is $67.2