8.10 An executive from a large merchandising firm has called your vice president

Question

8.10

An executive from a large merchandising firm has called your vice president for production to get a price quote for an additional 100 units of givrn product . The vice president has asked you to prepare a cost estimate , The number of hours required to produce a unit is 5 , The avarege labor rate is $12 per hour , The material cost $14 per unit , Overhead for an additional 100 units is estimated at 50% of the direct labor cost , if the company wants to have a 30% profit margin , What should be the unit price to quote ?

Explanation / Answer

profit margin is calculated on net income so

let price is P

(100P-10400)/100P = .3

P= 1040/7 =148.57

The number of hours required to produce a unit 5 The avarege labor rate 12 material cost 14 Overhead for an additional 100 units 50% of labour cost profit margin 30% Total Labour cost for 1 unit 60 Total Labour cost for 100 unit 6000 Material cost 1400 overhead 3000 total cost 10400

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.