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Homework answers / question archive / Nile company invested $3,000,000 in assets to produce (A10) product with a capacity of 55000 units, while :normal sales 50000 units the cost of production is DM $25 per unit DL $15per unit V
Nile company invested $3,000,000 in assets to produce (A10) product with a capacity of 55000 units, while :normal sales 50000 units the cost of production is DM $25 per unit DL $15per unit V.OH $20 per unit Fixed OH is $450,000 for a full capacity Answer following questions What is a minimum price should be set for a .1 special order of 5000 units What is a minimum price should be set for a .2 special order of 8000 units that needs additional fixed cost of $32,000 What is the normal price should be set if markup .3 is 10% of total variable cost What is the normal price should be set if markup .4 is 20% of total cost What is the normal price should be set if markup.5 is 10% return on investment Compute target cost if market price is $65 and 6 the company want to maintain 10% return on investment as a markup If selling price is determined as $80 compute the 7 markup % of variable cost
Answer : 1.) Calculation of Minimum Price which should be set for minimum order of 5000 units :
Minimum Price to be charged = Direct material + Direct Labour + Variable Overhead
= 25 + 15 + 20
= 60
Answer :2) Calculation of Minimum Price which should be set for minimum order of 8000 units :
Minimum Price to be charged = Direct material + Direct Labour + Variable Overhead + Additional Fixed Overhead
= 25 + 15 + 20 + (32000 / 8000)
= 64
Answer : 3) Calculation of Normal Price to be set = (Direct material + Direct Labour + Variable Overhead) * 1.10
= 66
Answer :4) Calculation of Normal Price to be set = (Direct material + Direct Labour + Variable Overhead + Fixed Overhead) * 1.20
= 25 + 15 + 20 + 9 (450000 / 50000)] * 1.20
= 82.8
