Terracotta, Inc., makes toy soldiers. Company management believes that a new mod

Question

Terracotta, Inc., makes toy soldiers. Company management believes that a new model would sell well at a price of $81.9. The company estimates unit materials costs to be $14 for the model, and overhead costs would average $42 per unit. The local wage rate for direct labor is $28 per hour. Terracotta has a goal of earning an operating profit of 30 percent of manufacturing costs for each of its products.

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

Terracotta, Inc., makes toy soldiers. Company management believes that a new model would sell well at a price of $81.9. The company estimates unit materials costs to be $14 for the model, and overhead costs would average $42 per unit. The local wage rate for direct labor is $28 per hour. Terracotta has a goal of earning an operating profit of 30 percent of manufacturing costs for each of its products.

Explanation / Answer

Selling price 81.9
Material coat 14
Labour cost 7
overhead 42
Total manufacturing cost 63
operating profit 18.9
so labour cost per unit =7
labour hr work=28
therefore =total labour hr =4 labour hr

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