Tech Com's predicted variable and fixed costs for next year are as follows: Manufacturing.. Selling and...

Transcribed Image Text:

Tech Com's predicted variable and fixed costs for next year are as follows: Manufacturing.. Selling and administrative. Total Direct materials. Direct labor... Variable Costs Manufacturing overhead Variable. Fixed.. Total manufacturing costs. $405,000 102,000 $507,000 Fixed Costs Tech Com is a small company producing a wide variety of computer interface devices. Per-unit manu- facturing cost information about one of these products, a high-capacity flash drive, is as follows: $ 424,200 594,000 $1,018,200 $8 4 3 6 $21 Variable selling and administrative costs for the flash drive are $4 per unit. Management has set a target profit for next year of $300,000 on the sale of the flash drive. Required a. Determine the markup percentage on variable costs required to earn the desired profit. b. Use variable cost markup to determine a suggested selling price for the flash drive. c. For the flash drive, break the markup on variable costs into separate parts for fixed costs and profit. Explain the significance of each part. d. Determine the markup percentage on manufacturing costs required to earn the desired profit. e. Use the manufacturing costs markup to determine a suggested selling price for the flash drive. f. Evaluate the variable and the manufacturing cost approaches to determine the markup percentage. Tech Com's predicted variable and fixed costs for next year are as follows: Manufacturing.. Selling and administrative. Total Direct materials. Direct labor... Variable Costs Manufacturing overhead Variable. Fixed.. Total manufacturing costs. $405,000 102,000 $507,000 Fixed Costs Tech Com is a small company producing a wide variety of computer interface devices. Per-unit manu- facturing cost information about one of these products, a high-capacity flash drive, is as follows: $ 424,200 594,000 $1,018,200 $8 4 3 6 $21 Variable selling and administrative costs for the flash drive are $4 per unit. Management has set a target profit for next year of $300,000 on the sale of the flash drive. Required a. Determine the markup percentage on variable costs required to earn the desired profit. b. Use variable cost markup to determine a suggested selling price for the flash drive. c. For the flash drive, break the markup on variable costs into separate parts for fixed costs and profit. Explain the significance of each part. d. Determine the markup percentage on manufacturing costs required to earn the desired profit. e. Use the manufacturing costs markup to determine a suggested selling price for the flash drive. f. Evaluate the variable and the manufacturing cost approaches to determine the markup percentage.