Innova Corporation makes a commercial-grade cooking griddle. The following infor
ID: 2386749 • Letter: I
Question
Innova Corporation makes a commercial-grade cooking griddle. The following information is available for Innova Corporation’s anticipated annual volume of 30,000 units.PER UNIT TOTAL
Direct Materials $17
Direct Labor $8
Variable Manufacturing Overhead $11
Fixed Manufacturing
Overhead $360,000
Variable Selling and Administrative Expenses $4
Fixed Selling and Administrative Expenses $150,000
** The company uses a 40% markup percentage on total cost.
(a) Compute the total cost per unit
(b) Compute the target selling price
Explanation / Answer
(A) Direct Material $17
Direct labor $ 8
Variable manufacturing overhead $11
Variable selling & administrative cost $ 4
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Total Variable Costs $40 per unit
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Fixed Manufacturing cost $360,000
Fixed Selling & administrative cost $150,000
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Total Fixed Costs $510,000
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Number of units 30,000
Fixed cost per unit ($510,000/30,000) $17
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Variable cost per unit $40
Total Cost per unit $57
Desired ROI 40% $22.80
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