USB Inc. predicted 2019 variable and fixed costs are as follows: Company budgeted for: 108,000 Units

Variable Costs Fixed Costs

Manufacturing 1,728,000 432,000

Selling and Administrative 216,000 60,500

Total 1,944,000 492,000

USB Inc. produces a wide variety of computer interface devices. Per unit manufacturing cost information about one of these products, a high-capacity flash drive is as follows:

Direct Material $5

Direct Labor $8

Variable Manufacturing Overhead $3

Fixed Manufacturing Overhead- allocated per unit $4

Total Manufacturing Costs $20

The following is the variable selling and administrative costs for the flash drive: $2

Management has set a 2019 target profit on the flash drive of: $200,000

Required:

1. Determine the markup percentage on total variable costs required to earn the desired profit

2. Use the variable cost markup you determined in #1 above to determine a suggested selling price for a flash drive. You are determining selling price per unit.

selling price is based on total variable cost plus markup from #1 above

Total Variable Cost Per Unit ________

Markup Above total Variable cost _______

Selling Price Per Unit _______

3. For the flash drive, break the markup determined in #2 above on variable costs into separate parts for fixed costs and profit.

Markup for fixed costs ______

Markup for profit ______

Total markup which should agree with what you calculated in #2 above for markup above variable cost ________