Question

In: Accounting

KISS Electronics is considering the production of a new Blu-ray player. The managerial accountant has provided...

KISS Electronics is considering the production of a new Blu-ray player. The managerial accountant has provided the following information:

Number of units to be produced each year 10,000
Unit variable manufacturing costs $79
Fixed manufacturing costs $331,000
Required ROI 20%
Estimated investment required by the company $441,000
Unit variable selling and administrative costs $8
Fixed selling and administrative costs $111,750

Required: answer the following questions by providing only numeric values without any formatting to the boxes given below. Round all the numbers to the 2nd decimal places.

a. Assume KISS uses the absorption approach to cost-plus pricing and the unit sales is 10,000 units, calculate the unit cost, the markup percentage, and the unit sales price by filling in the following boxes:

Unit variable cost Blank 1. Calculate the answer by read surrounding text.
Unit fixed cost Blank 2. Calculate the answer by read surrounding text.
Unit cost Blank 3. Calculate the answer by read surrounding text.
Markup percentage Blank 4. Calculate the answer by read surrounding text.
Unit sales price Blank 5. Calculate the answer by read surrounding text.

b. Assume KISS uses the absorption approach to cost-plus pricing with a markup percentage of 25%, and the unit sales is 7,500 units, calculate the unit cost and the unit sales price by filling in the following boxes:

Unit variable cost Blank 6. Calculate the answer by read surrounding text.
Unit fixed cost Blank 7. Calculate the answer by read surrounding text.
Unit cost Blank 8. Calculate the answer by read surrounding text.
Markup Blank 9. Calculate the answer by read surrounding text.
Unit sales price Blank 10. Calculate the answer by read surrounding text.

c. Assume KISS uses the total variable cost approach to cost-plus pricing and the unit sales is 7,500 units, calculate the unit cost, the markup percentage, and the unit sales price by filling in the following boxes:

Unit cost Blank 11. Calculate the answer by read surrounding text.
Markup percentage Blank 12. Calculate the answer by read surrounding text.
Unit sales price Blank 13. Calculate the answer by read surrounding text.

Solutions

Expert Solution

Answer (a):

Variable costs per unit (79+8)                          87

Fixed Costs   per unit                                    44.28

(331000+111750/10000                          ---------------

Total cost  per unit                                            131.28

Add mark up @ 20%                                          26.26

                                                                      ---------------

Unit Price                                                               157.54

                                                                      =========

Answer (b):

Variable costs per unit (79+8)                          87

Fixed Costs   per unit                                    59.03

(331000+111750/7500                          ---------------

Total cost  per unit                                            146.03

Add mark up @ 25%                                          36.51

                                                                      ---------------

Unit Price                                                            182.54

                                                                      =========

Answer (c):

Variable costs per unit (79+8)                          87

Fixed Costs   per unit                                    59.03

(331000+111750/7500                          ---------------

                                                                   146.03

Add mark up @ 25% of 87                                        21.75

                                                                      ---------------

Unit Price                                                            167.78

                                                                      =========

ekkarill92 answered 2 years ago
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