Question

Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation's anticipated annual volume of 483,000 units. Per Unit Total $6 $10 $14 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $2,898,000 $17 $1,449,000 The company has a desired ROI of 25%. It has invested assets of $27,048,000 (a) Compute the total cost per unit, Total cost per unit $

Answer 1

When total costs, including direct labour and material, are taken into account, the price per unit will be $34.

The total cost per unit = Direct material+ Direct labor + variable manufacturing overhead + [fixed manufacturing overhead + fixed selling and administration expenses /no. of units]

Total cost per unit = $6 + $10 +$14 + [ $2,898,000 + $1,449,000/483,000]

                               = $34

Total cost is the total of all costs incurred in order to produce any form of output. The whole cost method is more practical from an accounting perspective in financial reporting, since operational costs must be attributed to certain assets. Direct labor is less important when making short-term decisions since it is more likely that only indirect costs will be taken into account. It offers the most complete overall picture of money invested. There are several definitions for "total cost" listed below. The total cost of an item is the sum of all associated costs, including fixed costs, indirect costs, and mixed costs.

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