Lodrobe Company manufactures a single product: wardrobes. Lodrobe's wardrobes have a unique design that is not...
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Lodrobe Company manufactures a single product: wardrobes. Lodrobe's wardrobes have a unique design that is not replicated by any other wardrobe manufacturer. The company was formed at the beginning of last year with an initial investment of $800,000. Lodrobe requires a 25% annual rate of return on the investment. In total, 10,000 wardrobes were produced and sold last year. For the upcoming year, the production and sales volumes are not expected to change from last year. The following costs are budgeted for the upcoming year: Per Unit Total (10,000 units) Direct materials $80 Direct labor $70 Variable manufacturing overhead $25 Fixed manufacturing overhead $100,000 $400,000 General and administrative expenses To price its product, Lodrobe uses the cost plus pricing method. The company has a policy of using the absorption costing method for assigning costs to inventory and the formula method for determining a markup percentage. Required a) Determine the budgeted full cost per unit (a wardrobe) for the upcoming year. b) Calculate the markup percentage. Lodrobe Company manufactures a single product: wardrobes. Lodrobe's wardrobes have a unique design that is not replicated by any other wardrobe manufacturer. The company was formed at the beginning of last year with an initial investment of $800,000. Lodrobe requires a 25% annual rate of return on the investment. In total, 10,000 wardrobes were produced and sold last year. For the upcoming year, the production and sales volumes are not expected to change from last year. The following costs are budgeted for the upcoming year: Per Unit Total (10,000 units) Direct materials $80 Direct labor $70 Variable manufacturing overhead $25 Fixed manufacturing overhead $100,000 $400,000 General and administrative expenses To price its product, Lodrobe uses the cost plus pricing method. The company has a policy of using the absorption costing method for assigning costs to inventory and the formula method for determining a markup percentage. Required a) Determine the budgeted full cost per unit (a wardrobe) for the upcoming year. b) Calculate the markup percentage.
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