Question

Mussatto Corporation produces snowboards. The following per unit cost information is available: direct materials $12, direct labor $4, variable manufacturing overhead $9, fixed manufacturing overhead $10, variable selling and administrative expenses $5, and fixed selling and administrative expenses $12. Using a 45% markup percentage on total per unit cost, compute the target selling price. (Round answer to 2 decimal places, e.g. 10.50.)

Answer 1

$75.40

Step-by-step explanation:

Mark up is a percentage applied on the cost to get the selling price. In other word, the difference between the marked-up amount and the total cost gives the profit of the entity.

To get the target selling price, we would first determine the total cost, then apply the mark up percentage on the cost and add the result to the cost.

Total cost per unit

= $12 + $4 + $9 + $10 + $5 + $12

= $52

Amount of mark up

= 45% * $52

= $23.40

Target selling price = $52 + $23.40

= $75.40