Sirhuds Inc., a maker of smartwatches, reports the information below on its product. The company uses absorption costing and has a target markup of 40% of absorption cost per unit. Direct materials cost$128per unitDirect labor cost$58per unitVariable overhead cost$36per unitFixed overhead cost$231,000per yearVariable selling and administrative expenses$17per unitFixed selling and administrative expenses$190,000per yearExpected production (and sales) 22,000units per year Compute the target selling price per unit under absorption costing. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) HENNA CO.Forecasted Contribution Margin Income StatementProduct TProduct OTotalUnits$ Per unitTotalS Per unitTotalSalesVariable costContribution marginFixed costsIncome (Loss) before taxesincome taxes (tax benefit)Net income (loss)

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Answered: Direct materials cost $ 128 per unit…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 10E

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Sirhuds Inc., a maker of smartwatches, reports the information below on its product. The company uses absorption costing and has a target markup of 40% of absorption cost per unit.


Direct materials cost	$	128	per unit
Direct labor cost	$	58	per unit
Variable overhead cost	$	36	per unit
Fixed overhead cost	$	231,000	per year
Variable selling and administrative expenses	$	17	per unit
Fixed selling and administrative expenses	$	190,000	per year
Expected production (and sales)		22,000	units per year

Compute the target selling price per unit under absorption costing. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

HENNA CO.
Forecasted Contribution Margin Income Statement
Product T
Product O
Total
Units
$ Per unit
Total
S Per unit
Total
Sales
Variable cost
Contribution margin
Fixed costs
Income (Loss) before taxes
income taxes (tax benefit)
Net income (loss)

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