Samson Corporation is in the process of setting a selling price for a new produc

Question

Samson Corporation is in the process of setting a selling price for a new product it has just designed. The following data relate to this product for a budgeted volume of 50,000 units.
..............................................Per Unit..........Total
Direct materials...........................$ 50
Direct labor....................................70
Variable manufacturing overhead........25
Fixed manufacturing overhead......................$1,800,000
Variable selling & adm expenses..........15
Fixed selling and administrative expenses.........1,200,000

Samson uses cost-plus pricing to set its target selling price. The markup on total unit cost is 25%.
Compute the Desired ROI per unit.

a $45.25
b $55
c $51.25
d $49

Explanation / Answer

$50 + $70 + $25 + $15 = $160 $160 * 50,000 = $8,000,000 $8,000,000 + $1,800,000 + $1,200,000 = $11,000,000 $11,000,000/ 50,000 = $220 $220 * 0.25 = $55 The answer is b $55 Hope this helped, good luck

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