Kearney, Inc., makes kitchen tools. Company management believes that a new model

Question

Kearney, Inc., makes kitchen tools. Company management believes that a new model of coffee grinder would sell well at a price of $92.40. The company estimates unit materials costs to be $6.00 for the model, and overhead costs would average $42.40 per unit. The local wage rate for direct labor is $22.00 per hour. Kearney has a goal of earning an operating profit of 40.00 percent of manufacturing costs for each of its products.

Required: What direct labor-hour input (hours per unit) could Kearney allow and still achieve its profit goal? (Round your answer to 2 decimal places.)

Maximum direct labor time per unithours is:

Explanation / Answer

Target cost per unit = 92.40/(1.4)= $66 Target labor cost = 66-6-42.4= $17.6 Maximum direct labor time per unit = 17.6/22= 0.8 hours

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

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