Wamser Corporation needs to set a target price for its newly designed product, E2-D2. The following data relate to it:

These costs are based on a budgeted volume of 1 million units produced and sold each year. Wamser uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 25%.
Instructions
(a) Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for E2-D2.
(b) Calculate the desired ROI per unit for E2-D2.
(c) Calculate the target selling price for E2-D2.
(d) Calculate the variable cost per unit, fixed cost per unit, and total cost per unit, assuming that 800,000 E2-D2s are produced during the year.

Transcribed Image Text:

Per Unit $15 25 14 Total Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $4,000,000 12 2,000,000