Beans Corporation makes a mechanical stuffed alligator that sings the Martian na
ID: 2347026 • Letter: B
Question
Beans Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Stahl Corporation's anticipated annual volume of 500,000 units.Per Unit Total
Direct materials $7
Direct labor $9
Variable manufacturing overhead $15
Fixed manufacturing overhead $3,300,000
Variable selling and administrative expenses $14
Fixed selling and administrative expenses $1,500,000
The company has a desired ROI of 25%. It has invested assets of $24,000,000.
1. Compute the total cost per unit. (Round answer to 2 decimal places, e.g. 10.50.)
2.Compute the desired ROI per unit. (Round answer to 2 decimal places, e.g. 10.50.)
3.Compute the markup percentage using total cost per unit. (Round answer to 2 decimal places, e.g. 10.50. Use the rounded amounts from the previous questions when calculating the answer for this question.)
4.Compute the target selling price. (Round answer to 2 decimal places, e.g. 10.50. Use the rounded amounts from the previous questions when calculating the answer for this question.)
Explanation / Answer
Direct materials $7
Direct labor $9
Variable manufacturing overhead $15
Fixed manufacturing overhead= 6.60
Variable selling and administrative expenses=14.00
fixedselling and administrative expenses=3.00
total cost per unit =54.60$
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desired ROI per unit = (desired ROIA x invested asses ) / units desired
= (25% x24,000,000) / 500,000
= 6,000,000) / 500,000 =12.00
==========================
= 12.00 / 54.60
markup percentage using total cost per unit=21.98%
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target selling price = per unit cost +desiredROi per unit per unit
target selling price = 54.60 + 12.00= 66.60
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