GIVEN: Kann Corporation produces industrial robots forhigh-precision manufacturing. The following information isavailable:

Per Unit Total

Direct materials $25.00

Direct labor $10.00

Variable manufacturing overhead $6.00

Fixed manufacturing overhead $36,000

Variable selling and administrative costs $4.00

Fixed selling and administrative costs $15,000

The company has a desired ROI of 20%. It has invested assets of$420,000. It anticipates making and selling 3,000 units peryear.


Part 1: Using the total (full) cost concept, determine the (a)unit cost amount; (b) markup percentage; and (c) unit targetselling price.

Part 2: Using the product (absorption) cost concept, determinethe (a) unit cost amount; and (b) markup percentage.

Part 3: Using the variable cost concept, determine the (a) unitcost amount; and (b) markup percentage.

Part 4: What is the target unit selling price under the threecost assumptions?

Part 5: What else should be considered when setting theproduct's selling price?

Part 6: Which of the three costing concepts would be mostappropriate in each of the following situations? 1. Externalreporting for GAAP 2. Normal (long-run) pricing 3. Evaluatingspecial orders

Part 7: Kann Corporation received a special order for 500 robotsat $50 each from a foreign customer. Acceptance of the order wouldincrease variable selling costs by $1.70 per unit because ofshipping costs, but would not increase fixed costs or interferewith any current orders. Prepare a differential analysis todetermine whether the special order should be accepted or not.

My school has no tutors for this; I will post what little Ihave, and attempt more myself, but I really do not know what I'mdoing. I do not know how these figures that I have weredetermined:

Full cost for 3000 units Absorption cost for 3000units Variable costs for 3000units
Direct materials $75,000 $75,000 $75,000
Direct labor 30,000 30,000 30,000
Variable manufacturingoverhead 18,000 18,000 18,000
Fixed manufacturingoverhead 36,000 36,000
Variable selling overhead 12,000 12,000
Fixed selling overhead 15,000
Total cost 186,000 159,000 135,000
Cost per unit 62 53 45
Desired profit = 42,000 *20% 84,000 84,000 84,000
Sales value 270,000 243,000 219,000
Sales price per unit 90 81 73

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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