Steeze Co. makes snowboards and uses the total cost approach in setting product

Question

Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 10,000 units follow. The company targets a profit of $300,000 on this product ts per Unit Direct materials Direct labor Overhead Selling 470,000 105,000 25,000 100 Overhead 25 Selling 20 Administrative 1. Compute the total cost per unit 2. Compute the markup percentage. (Round your final percentage answer to 1 decimal place. 3. Compute the product's selling price Total cost por unit 2 Markup percentage 3 Selling price

Explanation / Answer

Variable Cost Cost per unit Cost for 10,000 units Direct Material 100 $10,00,000 Direct Labour 25 $2,50,000 Overhead 20 $2,00,000 Selling 5 $50,000 Total Variable Cost $15,00,000 Fixed Costs Overhead $4,70,000 Selling $1,05,000 Administrative $3,25,000 Total Fixed Costs $9,00,000 Total Cost $24,00,000 Add: Target Profit $3,00,000 Selling Price $27,00,000 1.Total Cost =2400000/10000 240 2. Markup percentage =300000/2400000 12.5% 3. Selling Price =2700000/10000 270 Sales as is Process Further Sales 430000 =5400*109 =11300*54 Total Sales(a) $4,30,000 $11,98,800 Relevant Cost =25000*20 =25000*20 Additional Cost =260000 Total Cost(b) $5,00,000 $7,60,000 Income/(loss) (a+b) -$70,000 $4,38,800 Additional profit from further process $5,08,800.00 Since the company will earn extra income of $5,08,800, so the company should further process the product Note- Best effort have been made to answer the question correctly, in case of any discrepencies kindly comment and i will try to resolve it as soon as possible. Please provide positive feedback.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.