# Acc301 Essentials of Accounting: P11-1A Lafluer Corporation needs to set a target price

Acc301 Essentials of Accounting

P11-1A

Lafluer Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product.

Per Unit Total

Direct materials 20

Direct labor 42

Variable manufacturing overhead 10

Fixed manufacturing overhead 1,440,000

Variable selling and administrative expenses 5

Fixed selling and administrative expense 1,040,000

These costs are based on a budgeted volume of 80,000 units produced and sold each year. Lafluer uses cost-plus pricing methods to set its target selling price. The markup on total unit cost is 30%.

Instructions:

1. Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14-M16.

2. Compute the desired ROI per unit for M14-M16.(Round answer to 2 decimal places, e.g. 10.50.)

3. Compute the target selling price for M14-M16.(Use the rounded amount from the previous question when calculating the answer for this question.Round answer to 2 decimal places, e.g. 10.50.)

4. Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,000 M14 - M16s are sold during the year. (Round answers to 2 decimal places, e.g. 10.50.)

P11-1A

Lafluer Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product.

Per Unit Total

Direct materials 20

Direct labor 42

Variable manufacturing overhead 10

Fixed manufacturing overhead 1,440,000

Variable selling and administrative expenses 5

Fixed selling and administrative expense 1,040,000

These costs are based on a budgeted volume of 80,000 units produced and sold each year. Lafluer uses cost-plus pricing methods to set its target selling price. The markup on total unit cost is 30%.

Instructions:

1. Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for M14-M16.

2. Compute the desired ROI per unit for M14-M16.(Round answer to 2 decimal places, e.g. 10.50.)

3. Compute the target selling price for M14-M16.(Use the rounded amount from the previous question when calculating the answer for this question.Round answer to 2 decimal places, e.g. 10.50.)

4. Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,000 M14 - M16s are sold during the year. (Round answers to 2 decimal places, e.g. 10.50.)

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