Q14E

Expert-verifiedFound in: Page 1054

Book edition
7th

Author(s)
John J Wild, Ken W. Shaw, Barbara Chiappetta

Pages
1096 pages

ISBN
9781259726705

**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.**

**Variable Costs per Unit**

**Direct materials $100**

**Direct labor . 25**

**Overhead 20**

**Selling . 5**

**Fixed Costs (in total)**

**Overhead $470,000**

**Selling . 105,000**

**Administrative. 325,000**

**1. Compute the total cost per unit.**

**2. Compute the markup percentage on total cost.**

**3. Compute the product’s selling price using the total cost method.**

Total cost per unit is $240. Markup percentage on total cost is 12.5%. The selling price of the product using the total cost method is $270

The variable cost is the cost that changes according to the production level or other activities.

Hence the total cost per unit is $240.

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