Question

The following data pertain to LawnMate Corporation’s top-of-the-line lawn mower.
Variable manufacturing cost............................................................. $275
Applied fixed manufacturing cost.................................................... 55
Variable selling and administrative cost........................................... 66
Allocated fixed selling and administrative cost................................ ?
To achieve a target price of $495 per lawn mower, the markup percentage is 12.5 percent on total unit cost.

Required:
1. What is the fixed selling and administrative cost allocated to each unit of LawnMate’s top-of-the-line mower?
2. For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $495 per mower:
(a) Variable manufacturing cost,
(b) Absorption manufacturing cost, and
(c) Total variable cost.



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  • CreatedApril 22, 2014
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