Schopp Corporation makes a mechanical stuffed alligator that sings the Martian n

Question

Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 515,000 units. nit Total Direct materials 7.06 11.06 14.78 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $3,239,350 13.80 $1,601,650 The company has a desired ROI of 26 %. It has invested assets of $ 27,484,000 Your answer is correct. Compute the total cost per unit. (Round answer to 2 decimal places, e.g. 10.5o.) Total cost per unit 56.10

Explanation / Answer

Answer 1 Question 1:

Direct Materials = No. of units * Direct materials per unit
Direct Materials = 515,000 * $7.06
Direct Materials = $3,635,900

Direct Labor = No. of units * direct labor per unit
Direct Labor = 515,000 * $11.06
Direct Labor = $5,695,900

Varibale Manufacturing Overhead = No. of Units * Variable manufacturing overhead per unit
Variable Manufacturing Overhead = 515,000 * $14.78
Variable Manufacturing Overhead = $7,611,700

Variable Selling and Administrative Expenses = No. of units * Variable selling and administrative expenses
Variable selling and administrative expenses = 515,000 * $13.80
Variable selling and administrative expenses = $7,107,000

Total Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead + Variable Selling and Administrative Expenses + Fixed Selling and Administrative Expenses
Total Cost = $3,635,900 + $5,695,900 + $7,611,700 + $3,239,350 + $7,107,000 + $1,601,650
Total Cost = $28,891,500

Part a:

Total Cost per unit = Total Cost / No. of Units
Total Cost per unit = $28,891,500 / 515,000
Total cost per unit = $56.10

Part b:

Desired ROI per unit = Invested Assets / Desired ROI
Desired ROI per unit = ($27,484,000*26%) / no. of units
Desired ROI per unit = $7,145,840 / 515,000
Desired ROI per unit = $13.88

Part c:

Markup percentage using total cost per unit = Desired ROI per unit / Total cost per unit *100
Markup percentage using total cost per unit = $13.88 / $56.10 *100
Markup percentage using total cost per unit = 24.78%

Part d:

Target Selling price =Total cost per unit *124.78%
Target Selling price = $56.10 * 124.78%
Target Selling price = $70

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