Question

Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 33,900 units.

	Per Unit				Total
Direct materials		$17
Direct labor		$5
Variable manufacturing overhead		$12
Fixed manufacturing overhead					$339,000
Variable selling and administrative expenses		$6
Fixed selling and administrative expenses					$101,700

The company uses a 44% markup percentage on total cost.

1) Total cost per unit

2) Calculate fixed manufacturing overhead per unit

3) Calculate fixed selling and administrative expenses per unit

Answer 1

1)

Direct material	$ 17
Direct labour	$    5
Variable manufacturing overhead	$ 12
Fixed manufacturing overhead ($339,000/33,900)	$ 10
Variable selling and administrative expense	$    6
Fixed selling and administrative expense ($101,700/33,900)	$    3
Total cost per unit	$ 53

2)

Fixed manufacturing overhead per unit = Total fixed manufacturing overhead / Number of units anticipated

Fixed manufacturing overhead per unit = $339,000 / 33,900 units

Fixed manufacturing overhead per unit = $10 per unit

3) Fixed selling and administrative expenses per unit = Total fixed selling and administrative expense / Number of units anticipated

Fixed selling and administrative expenses per unit = $101,700 / 33,900 units

Fixed selling and administrative expenses per unit = $3 per unit