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Question 4: 14 Marks Use cost-plus pricing to determine various amounts. Ahmed Corporation makes a mechanical...

Question 4: 14 Marks

Use cost-plus pricing to determine various amounts.

Ahmed Corporation makes a mechanical stuffed alligator. The following information is available for Ahmed Corporation's expected annual volume of 500,000 units:

Per Unit Total

Direct materials $17

Direct labour 8

Variable selling and administrative expenses 11

Fixed manufacturing overhead $360,000

Variable selling and administrative expenses 4

Fixed selling and administrative expenses 150,000

The company has a desired ROI of 25%. It has invested assets of $24 million.

Instructions

(a) Calculate the total cost per unit. – ( 3 Marks)

(b) Calculate the desired ROI per unit – ( 3 Marks)

(c) Calculate the markup percentage using the total cost per unit. – ( 4 Marks)

(d) Calculate the target selling price. –

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