Exercise M-5 Schopp Corporation makes a mechanical stuffed alligator that sings

Question

Exercise M-5 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 501,000 units. Per Unit Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 6.89 $10.96 $15.20 $3,466,920 $13.92 $1,272,540 The company has a desired ROI of 27%. It has invested assets of $28,985,000. Compute the total cost per unit. (Round answer to 2 decimal places, e.g. 10.50.) Total cost per unit s

Explanation / Answer

1 Per unit Direct materials 6.89 Direct labor 10.96 variable manufacturing overhead 15.2 Fixed manufacturing overhead 6.92 =3466920/501000 Variable selling and administrative expense 13.92 Fixed selling and administrative expense 2.54 =1272540/501000 Total cost per unit 56.43 2 Desired ROI per unit = (28985000*27%)/501000= 15.62 3 Markup percentage = 15.62/56.43= 27.68% 4 Target selling price = 56.43+15.62= 72.05

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