Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 37,000 units follow. The company targets a profit of $317,000 on this product.
| Variable Costs per Unit | Fixed Costs | ||||||
| Direct materials | $ | 87 | Overhead | $ | 687,000 | ||
| Direct labor | 57 | Selling | 322,000 | ||||
| Overhead | 42 | Administrative | 302,000 | ||||
| Selling | 32 | ||||||
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1. Compute the variable cost per unit .?
2. Compute the markup percentage on variable cost. ?
3. Compute the product’s selling price using the variable cost method .?
