Make the target selling price of the product

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Reference no: EM132927896

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

The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 30,000 units per year.

The company has invested $600,000 in this product and expects a return on investment of 15%.

Required:

Problem a) the markup on absorption cost.

Problem b) the target selling price of the product using the absorption costing approach.

Reference no: EM132927896

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