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The company uses the absorption costing approach to

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Reference no: EM13483241

Gilder 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's markup must be enough to cover the projected SG&A for the year and profit of $90,000.

Required:

(a.) Compute the absorption cost of the product.

(b.) Compute the required markup percentage.

(c.) Compute the target selling price of the product.

 

Reference no: EM13483241

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