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Gildersleeve Corporation manufactures a product that has the following costs:
Per unit Per year
Direct Materials $6.00
Direct Labour 5.00
Variable manufacturing overhead 4.00
Fixed manufacturing overhead $360,000
Variable SG&A expenses 5.00
Fixed SG&A expenses 120,000
Required:
Question a) Compute the markup on absorption cost.
Question b) Compute the target selling price of the product using the absorption costing approach.
The company actually purchased 10,600 pounds of direct materials costing $27.50 per pound to make the 4900 units. What is the direct materials price variance?
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