Budgeting and Standard Costing – Quiz

Leekee Shipyards has a new barnacle removing product for ocean going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product.

Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information:

Per unit


Direct Materials


Direct labor


Variable Manufacturing Overhead


Fixed Manufacturing Overhead


Variable Selling and Administriative Expenses


Fixed Selling and Administrative Expenses