Reference no: EM132523873

Tata Corporation is in the process of setting a selling price for a new product it has just designed. The following data relate to this product for a budgeted volume of 60,000 units.

                                                                                     Per Unit                                   Total

Direct materials                                                    $20

Direct labor                                                           40

Variable manufacturing overhead                               10

Fixed manufacturing overhead                                                                 $1,800,000

Variable selling and administrative expenses                     6

Fixed selling and administrative expenses                                                  $ 1,440,000

• Tata uses cost-plus pricing to set its target selling price. The markup on total unit cost is 30%.

Instructions:

Question 1: Compute each of the following for the new product, and show all the workings: 1. Total variable cost per unit, total fixed cost per unit, and total cost per unit. 2. Desired profit per unit. 3. Target selling price.