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Part 3 USB Inc. predicted 2018 variable and fixed costs are as follows: Company budgeted for:...

Part 3
USB Inc. predicted 2018 variable and fixed costs are as follows:				Company budgeted for:	43,200	Units
		Variable costs	Fixed costs
	Manufacturing	734,400	172,800
	Selling and Administrative	216,000	60,500
	Total	950,400	233,300

USB Inc. produces a wide variety of computer interface devices. Per unit
manufacturing cost information about one of these products, a high-capacity flash drive is as follows:

	Direct material	$6
	Direct labor	8
	Variable Manufacturing Overhead	3
	Fixed Manufacturing Overhead -allocated per unit	4
	Total manufacturing costs	$21

The following is the variable selling and administrative costs for the flash drive:				$5

Management has set a 2018 target profit on the flash drive of:				$200,000

Required: Make sure you show your work or use cell references for all calculations. You will not earn credit if you just type in your answer.

1. Determine the markup percentage on total variable costs required to earn the desired profit-46%

2. Use the variable cost markup you determined in #1 above to determine a suggested selling price for a flash drive. You are determining selling price per unit.

Selling price is based on total variable cost plus markup from #1 above.

Total variable cost per unit

Markup above total Variable cost

Selling price per unit

Expert Solution

1.

Variable Costs	Per unit	For 43,200 units
Direct Material	6	259,200
Direct Labor	8	345,600
Variable Manufacturing OH	3	129,600
Variable Selling and Admininstrative expenses	5	216,000
Total Variable Costs	22	950,400
Fixed Costs		233,300
Total Costs		1,183,700
Desired profit		200,000
Expected Sales		1,383,700

Mark up % = (Desired Sales - Variable cost) / Variable cost		45.59% approx 46%

2. Selling price per unit

Variable cost per unit = $22

+Mark up (22*45.59%) = $10.03

Selling price per unit = $32.03

Notes:

Selling price per unit = 32.03

Total sales = $1,383,700

ekkarill92 answered 1 year ago

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