Cost Plus Pricing- Selling Price - URGENT Please help!

[vgates81]

Direct Materials = $10
Direct Labor= $3
Variable Manf Overhead= $4
Fixed Manf Overhead= $150,000
Variable Selling and Admin Expense = $1
Fixed Selling and Admin Expense= $90,000

12,000 units planned for production
Optimal Markup on Unit product cost is 50%

Selling Price= ?

So here is what I did...

10 +3 + 4 +1 = $18 Unit cost right?

I have $18 unit product cost I take that 18 x (1 +.5) = 27.00 but that's not correct it says.

Where did I error?

 

[Deleted member 4993]

Direct Materials = $10
Direct Labor= $3
Variable Manf Overhead= $4
Fixed Manf Overhead= $150,000
Variable Selling and Admin Expense = $1
Fixed Selling and Admin Expense= $90,000

12,000 units planned for production
Optimal Markup on Unit product cost is 50%

Selling Price= ?

So here is what I did...

10 +3 + 4 +1 = $18 Unit cost right?

I have $18 unit product cost I take that 18 x (1 +.5) = 27.00 but that's not correct it says.

Where did I error?

Need to add the Mfg. overhead and Admin overhead.

cost/unit = 18 + (90000+150000)/12000 = 38

selling price = 38/0.5 = 76

 

[Denis]

selling price = 38/0.5 = 76

To the corner you go....

 

[Deleted member 4993]

selling price = 38/0.5 = 76

To the corner you go....

Wait a minute... that's how mark-up was defined in my class (wayyyy back when)

markup % = (mark-up amount)/(selling price) = (mark-up amount)/(cost + mark-up amount) .... and so on...

did the definition change on me?

I knew that I should not be cross-crafting - trying answer these business questions .....

 

[Denis]

No matter how you cook it, selling price = 38 * (1 + .5) = 57; I ain't paying you 78!!
You're a crook :shock:

 

[Deleted member 4993]

No matter how you cook it, selling price = 38 * (1 + .5) = 57; I ain't paying you 78!!
You're a crook :shock:

If I can "get" only 57 dollars, then,

mark-up% = (57-38)/57 * 100 = 33%