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Paige Corporation Cost Pricing

Price: $1.99

Paige Corporation makes a mechanical stuffed alligator that sings the Martian national
anthem. The following information is available for Paige Corporation’s anticipated
annual volume of 500,000 units.

  Per Unit Total
Direct materials  7
Direct labor  9
Variable manufacturing overhead  15
Fixed manufacturing overhead  3,000,000
Variable selling and administrative expenses  14
Fixed selling and administrative expenses  1,500,000
The company has a desired ROI of 25%. It has invested assets of $26,000,000.

(a) Compute the total cost per unit.
(b) Compute the desired ROI per unit.
(c) Using absorption-cost pricing, compute the markup percentage.
(d) Using variable-cost pricing, compute the markup percentage.

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