Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

Q: Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

a. b. Maximum manufacturing cost = $61 x 63% = $38.43 per unit Net Sales $700,000 100% Less: Cost of goods sold $441,000 63% Gross Profit $259,000 37%

ID: 2549970 • Letter: N

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Net sales for the year were $700,000 and cost of goods sold was $441,000 for the company's existing products. A new product is presently under development and has an expected selling price of not more than $61 per unit in order to remain competitive with similar products in the marketplace. Required a. Calculate gross profit and the gross profit ratio for the year. 1% b. What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the company's gross profit ratio? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Maximum manufacturing cost per unit

Explanation / Answer

b. Maximum manufacturing cost = $61 x 63% = $38.43 per unit

Net Sales $700,000 100% Less: Cost of goods sold $441,000 63% Gross Profit $259,000 37%

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Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

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