Product Cost Concept of Product Pricing Mademoiselle Company produces women\'s h

Question

Product Cost Concept of Product Pricing Mademoiselle Company produces women's handbags. The cost of producing 1,300 handbags is as follows: Direct materials $15,900 Direct labor 7,900 Factory overhead 5,800 Total manufacturing cost $29,600 The selling and administrative expenses are $26,500. The management desires a profit equal to 18% of invested assets of $504,000. If required, round your answers to nearest whole number.

a. Determine the amount of desired profit from the production and sale of 1,300 handbags.

-$ 90,720

b. Determine the product cost per unit for the production of 1,300 handbags.

-$ 23 per unit

c. Determine the product cost markup percentage for handbags. ___% ?

d. Determine the selling price of handbags. Round your answers to nearest whole value.

Cost $ 23 per unit

Markup ___$ per unit

Selling price ___$ per unit

Explanation / Answer

a. Determine the amount of desired profit from the production and sale of 1,300 handbags.

= $504,000* 18%

=$ 90,720

b. Determine the product cost per unit for the production of 1,300 handbags.

c. Determine the product cost markup percentage for handbags. 161.71% ?

d. Determine the selling price of handbags. Round your answers to nearest whole value.

Cost $ 23 per unit

Markup 69.78 $ per unit

Selling price 112.94 $ per unit

Particulars amount a Direct materials $    15,900.00 b Direct labor $      7,900.00 c Factory overhead $      5,800.00 d Total manufacturing cost (a+b+C) $    29,600.00 e selling and administrative expenses $    26,500.00 f Total Cost (d+e) $    56,100.00 g No of bags $      1,300.00 h product cost per unit (f+g) $            43.15

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