Answered

IDNLearn.com makes it easy to find answers and share knowledge with others. Find reliable solutions to your questions quickly and accurately with help from our dedicated community of experts.

Garcia Co. sells snowboards. Each snowboard requires direct materials of $119, direct labor of $49, and variable overhead of $64. The company expects fixed overhead costs of $673,000 and fixed selling and administrative costs of $160,000 for the next year. It expects to produce and sell 11,900 snowboards in the next year. What will be the selling price per unit if Garcia uses a markup of 15% of total cost

Sagot :

Abiolataiwo2015idn

Answer:

$70 per units

Explanation:

Calculation to determine What will be the selling price per unit if Garcia uses a markup of 15% of total cost

First step is to calculate total cost per unit.

Using this formula

Total Cost per unit = Unit Direct materials cost + Unit Direct labor costs + Unit Variable Costs + Unit Fixed Costs

Let plug in the formula

Total Cost per unit = $119 + 49 + 64 + 70

Total Cost per unit = $302

.

Second step is to calculate the Selling Price Per Unit

Selling Price Per Unit = $302 +( 15%*$302)

Selling Price Per Unit = 302 + 45.30

Selling Price Per Unit = $347.30

Third step is to calculate the Total Fixed Costs using this formula

Total Fixed Costs = fixed overhead costs + Fixed selling and administrative costs

Let plug in the formula

Total Fixed Costs=$673,000+$160,000

Total Fixed Costs= $833,000

Now let calculate the Fixed Cost per unit using this formula

Fixed Cost per unit = Total Fixed Costs / Total Units

Let plug in the formula

Fixed Cost per unit =$833,000/11,900

Fixed Cost per unit = $70 per unit

Therefore What will be the selling price per unit if Garcia uses a markup of 15% of total cost is $70 per unit

Thank you for using this platform to share and learn. Keep asking and answering. We appreciate every contribution you make. Thanks for visiting IDNLearn.com. We’re dedicated to providing clear answers, so visit us again for more helpful information.