Gundy Corporation produces area rugs. The following per unit cost information is available: direct materials $19, direct labor $6, variable manufacturing overhead $3, fixed manufacturing overhead $6, variable selling and administrative expenses $3, and fixed selling and administrative expenses $7. Using a 35% markup on total per unit cost, compute the target selling price.

59.4

Explanation:

Gundy Corporation target selling price

Particular Amount ($)

Direct material 19

Direct labor 6

Variable manufacturing overhead 3

Fixed manufacturing overhead 6

Variable selling and administrative expenses 3

Fixed selling and administrative expenses 7

Total cost 44

Add : Profit (35% * 44) 15.4

Target selling price per unit 59.4

(44+15.4)

Selling price = $59.4

Explanation:

Giving the following information:

direct materials $19

direct labor $6

variable manufacturing overhead $3

fixed manufacturing overhead $6

variable selling and administrative expenses $3

fixed selling and administrative expenses $7

Mark-up = 35% on total per-unit cost

First, we need to calculate the total unitary cost:

Total unitary cost = 19 + 6 + 3 + 6 + 3 + 7 = $44

Now, the selling price:

Selling price = 44*1.35 = $59.4