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16 February, 07:29

Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $19, direct labor $6, variable manufacturing overhead $3, fixed manufacturing overhead $6, variable selling and administrative expenses $3, and fixed selling and administrative expenses $7. Using a 35% markup on total per unit cost, compute the target selling price.

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  1. 16 February, 07:34
    0
    Selling price = $59.4

    Explanation:

    Giving the following information:

    direct materials $19

    direct labor $6

    variable manufacturing overhead $3

    fixed manufacturing overhead $6

    variable selling and administrative expenses $3

    fixed selling and administrative expenses $7

    Mark-up = 35% on total per-unit cost

    First, we need to calculate the total unitary cost:

    Total unitary cost = 19 + 6 + 3 + 6 + 3 + 7 = $44

    Now, the selling price:

    Selling price = 44*1.35 = $59.4
  2. 16 February, 07:39
    0
    59.4

    Explanation:

    Gundy Corporation target selling price

    Particular Amount ($)

    Direct material 19

    Direct labor 6

    Variable manufacturing overhead 3

    Fixed manufacturing overhead 6

    Variable selling and administrative expenses 3

    Fixed selling and administrative expenses 7

    Total cost 44

    Add : Profit (35% * 44) 15.4

    Target selling price per unit 59.4

    (44+15.4)
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