Question

Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 486,000 units.

		Per Unit			Total
Direct materials		$ 8
Direct labor		$10
Variable manufacturing overhead		$16
Fixed manufacturing overhead					$3,402,000
Variable selling and administrative expenses		$16
Fixed selling and administrative expenses					$1,458,000

The company has a desired ROI of 25%. It has invested assets of $29,160,000.

1. Compute the total cost per unit.

Total cost per unit

$enter the total cost per unit in dollars

2. Compute the desired ROI per unit.

Desired ROI per unit

$enter the desired ROI per unit in dollars

3. Compute the markup percentage using total cost per unit.

Markup percentage using total cost per unit

enter the markup percentage using total cost per unit

%

4. Compute the target selling price.

Target selling price

$enter the target selling price in dollars

Answer 1

Schopp Corporation
Answer 1	Amount $	Note
Fixed manufacturing overhead	3,402,000.00	A
Number of units	486,000.00	B
Fixed manufacturing overhead per unit	7.00	C=A/B
Fixed selling and administrative expenses	1,458,000.00	H
Fixed selling and administrative expenses per unit	3.00	I=H/B
Add:
Direct materials	8.00
Direct labor	10.00
Variable manufacturing overhead	16.00
Variable selling and administrative expenses	16.00
Total cost per unit	60.00	D
Answer 2	Amount $
Invested assets	29,160,000.00	E
ROI at 25%	7,290,000.00	F=E*25%
Number of units	486,000.00	See B
Desired ROI per unit	15.00	G=F/B
Answer 3	Amount $
Total cost per unit	60.00	See D
Desired ROI per unit	15.00	See G
Markup percentage	25.00%	K=G/D
Answer 4	Amount $
Total cost per unit	60.00	See D
Add: Desired ROI per unit	15.00	See G
Target selling price	75.00