Please help me to figure it out! Thanks! Variable Cost Concept of Product Pricin

Question

Please help me to figure it out! Thanks!

Variable Cost Concept of Product Pricing Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 3,000 units of medical tablets are as follows: Variable costs per unit: Fixed costs: Direct materials Direct labor Factory overhead Selling and admin. exp. Factory overhead 150,000 53 45 36 $280 Selling and admin. exp. 51,000 Total Willis Products desires a profit equal to a 25% rate of return on invested assets of $385,776 a. Determine the variable costs and the cost amount per unit for the production and sale of 3,000 units of medical tablets. 40,000 Variable cost per unit 280per unit b. Determine the variable cost markup percentage per unit. Round your percentage answer to one decimal place. c. Determine the selling price per unit. Use the rounded variable cost markup percentage in your calculations, and round the amount of the markup to the nearest whole dollar. per unit

Explanation / Answer

a) Total variable cost = 280*3000 = 840000

Variable cost per unit = $280 per unit

b) Markup percentage :

Fixed cost per unit = (150000+51000)/3000 = 67 per unit

Markup percentage = (385776*25%/3000)+67/280 = 35.4%

c) Selling price per unit = 280+(280*35.4%) = $379 per unit

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