Question

Garcia Co sells snowboards. Each snowboard requires direct materials of $101, direct labor of $31, and variable overhead of $46. The company expects foved overhead costs of $637,000 and fixed selling and administrative costs of $171,000 for the next year. It expects to produce and sell 10,100 snowboards in the next year. What will be the selling price per unit if Garcia uses a markup of 15% of total cost? (Round your answer to 2 decimal places.) Selling price Per Unit

Answer 1

Fixed overhead costs = $637,000

Fixed selling and administrative costs = $171,000

Number of units = 10,100

Fixed overhead cost per unit = Fixed overhead costs / Number of units

= 637,000/10,100

= $63.07

Fixed selling and administrative cost per unit = Fixed selling and administrative costs / Number of units

= 171,000/10,100

= $16.93

Total cost per unit = Direct materials + Direct labor + Variable overhead + Fixed overhead + Fixed selling and administrative cost

= 101+31+46+63.07+16.93

= $258

Markup = 15% on total cost

= 258 x 25%

= $38.7

Selling price per unit = Total cost per unit + Markup

= 258+38.7

= $296.7

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