The following data pertain to LawnMate Corporations top-of-the-line lawn mower. Variable manufacturing cost.............................................................$275 Applied fixed manufacturing cost....................................................
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.
Step by Step Answer:
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt