The company uses the absorption costing approach to

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Reference no: EM13485817

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: EM13485817

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