Oxmoor Manufacturing Co. expects to make 31,800 chairs during the current accoun

Question

Oxmoor Manufacturing Co. expects to make 31,800 chairs during the current accounting period. The company made 3,400 chairs in January. Materials and labor costs for January were $17,200 and $24,700, respectively. Oxmoor produced 1,300 chairs in February. Material and labor costs for February were $8,900 and $12,900, respectively. The company paid the $636,000 annual rental fee on its manufacturing facility on January 1. Required Assuming that Oxmoor desires to sell its chairs for cost plus 40 percent of cost, what price should be charged for the chairs produced in January and February?

Explanation / Answer

Statement of Cost and Selling Price

68000

[636000/31800*3400]

26000

[636000/31800*1300]

Jan Feb No. of Chairs 3400 1300 $ $ Materials 17200 8900 Labor 24700 12900 Rental Fee

68000

[636000/31800*3400]

26000

[636000/31800*1300]

Total Cost 109900 47800 Add: Profit 43960 19120 Sales 153860 66920 Selling Price per chair 45.25 51.48

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