The following data pertain to Lawn Master Corporation's top-of-the-line lawn mower.
Variable manufacturing cost ................................................................................................ $250
Applied fixed manufacturing cost ........................................................................................... 50
Variable selling and administrative cost .................................................................................. 60
Allocated fixed selling and administrative cost ........................................................................ ?
To achieve a target price of $450 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 Lawn Master'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 $450 per mower: (a) variable manufacturing cost, (b) absorption manufacturing cost, and (c) total variable cost?