Question

Gibbs Corporation produces industrial robots for high-precision manufacturing. The following information is given for Gibbs Corporation.

		Per Unit			Total
Direct materials		$390
Direct labor		$350
Variable manufacturing overhead		$  77
Fixed manufacturing overhead					$1,502,400
Variable selling and administrative expenses		$  56
Fixed selling and administrative expenses					$  638,520

The company has a desired ROI of 18%. It has invested assets of $63,852,000. It anticipates production of 3,130 units per year.

a.) Compute the cost per unit of the fixed manufacturing overhead and the fixed selling and administrative expenses.

b.) Compute the desired ROI per unit.

c.) Compute the target selling price.

Answer 1

	Direct Mat	390
	Direct Labor	350
	Variable Manf oh	77
	Variable Sellig oh	56
	Total Var cost	873
	Fixed manf oh	1502400
	Fixed Selling & adm exp	638520
	ROI	18%
	Assets	63852000
	Required profit	11493360
	Prod Unit	3130
a.	Fixed Manf oh/Unit	480
	Fixed Selling & adm exp/Unit	204
b	Desired ROI/unit	3672
c
	Target Profit	11493360
	Fixed cost	2140920
	Required Contribution	13634280
	Variable cost	2732490
	Total Sales	16366770
	Sales price	5229