Required:

a) What is the fixed selling and administrative cost allocated to each unit of LawnMate’s top-of-the-line mower?

b) For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $950 per mower:

(i) Variable manufacturing cost
(ii) absorption manufacturing cost
(iii) total variable cost.

Transcribed Image Text:

The following data relate to LawnMate Corporation's top-of-the-line lawnmower. Variable manufacturing cost Applied fixed manufacturing cost Variable selling and administrative cost $500 150 120 Allocated fixed selling and administrative cost ? To achieve a target price of $950 per lawnmower, the markup percentage is 12.5 per cent on total unit cost. The following data relate to LawnMate Corporation's top-of-the-line lawnmower. Variable manufacturing cost Applied fixed manufacturing cost Variable selling and administrative cost $500 150 120 Allocated fixed selling and administrative cost ? To achieve a target price of $950 per lawnmower, the markup percentage is 12.5 per cent on total unit cost.

Answer rating: 100% (QA)

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