Question
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. –
Homework Answers
Answer #1
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Question 4: 14 Marks Use cost-plus pricing to determine various amounts. Ahmed Corporation makes a mechanical...
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Direct materials $17
Direct labour 8
Variable selling and administrative expenses 11
Fixed manufacturing overhead $360,000
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