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Homework answers / question archive / Johnson Marine has the following costs and expected sales for the coming year
Johnson Marine has the following costs and expected sales for the coming year. Johnson is considering a number of different methods to determine the price of Its product.
Total Costs Variable Manufacturing $ 2,354,000 Variable Selling and Administrative 754,000 Plant-level Fixed Overhead 1,208,000 Fixed Selling and Administrative 604,000 Batch-level Fixed Overhead 204,000 Total Investment in Product Line 10,012,000 Expected Sales (units) 20,800
If Johnson determines price using a 21% markup of life cycle cost, the price is:
Computation of Price:
Price = Manufacturing Cost * (1+ Markup) / Number of Units
Here,
Manufacturing Cost = Variable manufacturing + Total selling and administrative + Total overhead
= 2354000 + (754,000+604,000) + (1,208,000+204,000)
Manufacturing Cost = $5,124,000
Price = $5,124,000*(1+21%)/20,800 = $298.08
