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Question - The following data relate to LawnMate Corporation's top-of-the-line lawnmower.
Variable manufacturing cost $550
Applied fixed manufacturing cost 110
Variable selling and administrative cost 132
Allocated fixed selling and administrative cost ?
To achieve a target price of $990 per lawnmower, the markup percentage is 12.5 per cent on total unit cost.
Required -
1. What is the fixed selling and administrative cost allocated to each unit of LawnMate's top-of-the-line mower?
2. For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $990 per mower:
(a) variable manufacturing cost
(b) absorption manufacturing cost
(c) total variable cost.
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