Question

Baird Manufacturing Co. expects to make 31,300 chairs during the year 1 accounting period. The company made 4,300 chairs in January. Materials and labor costs for January were $16,900 and $25,300, respectively. Baird produced 1,800 chairs in February. Material and labor costs for February were $9,500 and $14,000, respectively. The company paid the $563,400 annual rental fee on its manufacturing facility on January 1, year 1. The rental fee is allocated based on the total estimated number of units to be produced during the year.

Required Assuming that Baird desires to sell its chairs for cost plus 50 percent of cost, what price should be charged for the chairs produced in January and February? (Round intermediate calculations and final answers to 2 decimal places.)

Answer 1

Allocation rate of Annual rental
Annual rental cost			563400
Divide: Units estimated to be produced	31300
Allocation rate of Annual rental		18
Total cost and Selling price
			Jan	Feb
Direct Material		16900	9500
Direct labour		25300	14000
Allocated rental @ 18	77400	32400
Total cost			119600	55900
Add: Markup @50%		59,800	27,950
Total sales revenue		1,79,400	83,850
Divide: Units		4,300	1800
Selling price		41.72	46.58