Question

Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 40.000 units follow. The company targets a profit of $320,000 on this product. Variable Costs per Unit Fixed Costs (in total) Direct materials $ 90 Overhead $690,000 Direct labor 60 Selling 325,000 Overhead 45 Administrative 305,000 Selling 35 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. (Round percentage answer to 2 decimal places.) 3. Compute the product's selling price using the variable cost method. (Round your Intermediate percentage calculations and final answer to 2 decimal places.) s 230 1. Variable cost per unit 2. Markup percentage 3. Selling price

Answer 1

Soliton y variable cost per unit! $90 Direct materials Direct Labor overhead Selling $ 60 $.45 $ 35 $ 230 (2) Narkup percentage On Variablecast Cauculation of total variable cost : Direct marterials Cuoooo ke Markup percentage on Variable costi Total Variable cost No. of units x Variable produced cost per unit yooooX 230 $ 9200,000 Targeted profit & $320000 Markup percentage on Variable cost profit Total Variable Cost

$320,000 Xloo $ 9,200,000 3.48% 3.48 %. selling price workimore 5 $ 9200,000 Total Variable cost (from the above 2 [yoooo X230) Add: fined cast Overhead Selling Administrative 2 $ 690,000 $ 325,000 $ 305,000 = $ 10,5 20,000 Total rost Add: Targeted profit $ 320,000 sale vame an $ 10,840,000 Answer: selling price = Gale value No. of Units 10,84 0,000 40,000 $ 271 per units a