Question

Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 10,500 units follow. The company targets a profit of $315,000 on this product.

Variable Costs per Unit				Fixed Costs
Direct materials	$	101		Overhead	$	471,000
Direct labor		26		Selling		106,000
Overhead		21		Administrative		326,000
Selling		6

1. Compute the total cost per unit.
2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.)
3. Compute the product’s selling price using the total cost method.

1.	Total cost per unit
2.	Markup percentage
3.	Selling price

?????? chart?

Answer 1

1. Total cost per unit = (Variable cost + Fixed cost)/Number of units sold

Particulars	Amount
Direct materials	$101 / Unit
Direct labor	26 / Unit
Overhead	21 / Unit
Selling expenses	6 / Unit
Variable cost / Unit	$154
Variable cost ($154*10,500 Units)	$1,617,000
Fixed overhead	471,000
Fixed selling overhead	106,000
Administrative	326,000
Fixed cost	$903,000
Total cost	$2,520,000
Total cost / Unit = $2,520,000/10,500	$240

2) Markup percentage on Total cost = Profit / total cost

= $315,000 / 2,520,000 *100 = 12.5%

3) Product selling price

= Total cost per unit + Profit per unit = $240 + $315,000/10,500 = $270

I hope this will help you. If requires clarification , you may comment below.