Question

ABC Manufacturing is attempting to set the product price using the Cost Approach method of price...

ABC Manufacturing is attempting to set the product price using the Cost Approach method of price determination. The Direct Material Cost is $5,000 and the Direct Labor Cost is $8,000. The Factor Overhead is 130% of the Direct Labor Cost. The General Administrative and Selling Cost is 15% of the Manufacturing Cost and the Profit is 12% of the Total Cost. What is the selling price that ABC should set for this product? Show your work.

Business   Operations-Management   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Calculations Particulars Amount $
A Direct Materials            5,000
B Direct Labor            8,000
C = A + B Prime Cost          13,000
D = 130% of B Factory Overhead          10,400
E = C + D Manufacturing cost          23,400
F = E x 15% Selling and administrative costs            3,510
G = E + F Total cost          26,910
H = G x 12% Profit            3,229
I = G + H Selling Price          30,139
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Freddy D’s is setting a selling price on a new product using the absorption costing approach...
Freddy D’s is setting a selling price on a new product using the absorption costing approach to cost-plus pricing. Unit Year Direct material $29 Direct labor $20 Variable manufacturing overhead $8 Fixed annual manufacturing overhead $120,000 Variable selling and administrative expense $3 Fixed annual selling and admin expense $16,000 Freddy D’s Manager Nick plans to produce and sell 4,000 units annually. Freddy D’s new product will require an investment of $643,000 and have a required return on investment of 20%....
ABC Corporation produces one single product. The sales price and product cost are listed below: Sales...
ABC Corporation produces one single product. The sales price and product cost are listed below: Sales price is $15 per unit Variable Selling, G &A is $2.00 per unit Direct Material is $2.50 per unit Direct Labor is $1.00 per unit Variable Manufacturing Factory Overhead is $.50 per unit Fixed Selling G&A is $14,000 Fixed Manufacturing Factory Overhead is $20,000 During its first year of operations, the company produced 5,000 units and sold 3,800 units. Assume there is no beginning...
Smart Stream Inc. uses the product cost method of applying the cost-plus approach to product pricing....
Smart Stream Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $150 Factory overhead $350,000 Direct labor 25 Selling and administrative expenses 140,000 Factory overhead 40 Selling and administrative expenses 25 Total variable cost per unit $240 Smart Stream desires a profit equal to a 30% return on invested assets of $1,200,000. a. Determine the...
Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The...
Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Variable costs:      Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total 8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500. a. Determine the amount of desired...
Please show work Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method...
Please show work Product Cost Method of Product Costing MyPhone, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,190 units of cell phones are as follows: Variable costs: Fixed costs: Direct materials $64 per unit Factory overhead $200,900 Direct labor 39 Selling and admin. exp. 70,600 Factory overhead 28 Selling and admin. exp. 18 Total variable cost per unit $149 per unit MyPhone desires a profit equal to...
ABC Inc. manufactures and sells toys. Price and cost data are as follows: Selling price per...
ABC Inc. manufactures and sells toys. Price and cost data are as follows: Selling price per unit (package of 2 CDs)...................................... $27.00 Variable costs per unit: Direct material............................................................................................................... $6.00 Direct labor...................................................................................................................... $6.00 Artist's royalties.............................................................................................................. $4.50 Manufacturing overhead.......................................................................................... $4.00 Selling expenses............................................................................................................ $1.00 Total variable costs per unit............................................................ $21.50 Annual fixed costs: Manufacturing overhead.......................................................................................... $190,000 Selling and administrative....................................................................................... $300,000 Total fixed costs................................................................................ $490,000 Forecasted annual sales volume (120,000 units)......................... $3,240,000 If the company's direct-labor costs do increase by 8%, what selling price...
ABC Manufacturing has the following cost structure: Direct material (DM) per unit (DM/u) $20 Direct Labor...
ABC Manufacturing has the following cost structure: Direct material (DM) per unit (DM/u) $20 Direct Labor (DL) per unit (DM/u $30 Variable manufacturing overhead (VMO) per unit (VMO/u) $10 Fixed manufacturing overhead per year $100,000 Fixed selling and administrative expenses $200,000 Assume units produced 10,000 units sold 8,000 Using variable costing, the cost of goods sold is? $100,000 $120,000 $140,000 $480,000
Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs...
Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 23,000 units follow. The company targets a profit of $303,000 on this product. Variable Costs per Unit Fixed Costs Direct materials $ 73 Overhead $ 673,000 Direct labor 43 Selling 308,000 Overhead 28 Administrative 288,000 Selling 18 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. 3. Compute the product’s selling price using the variable cost...
ABC Inc. manufactures and sells toys. Price and cost data are as follows: Selling price per...
ABC Inc. manufactures and sells toys. Price and cost data are as follows: Selling price per unit (package of 2 CDs)...................................... $30.00 Variable costs per unit: Direct material............................................................................................................... $5.00 Direct labor...................................................................................................................... $6.00 Artist's royalties.............................................................................................................. $5.50 Manufacturing overhead.......................................................................................... $4.00 Selling expenses............................................................................................................ $2.30 Total variable costs per unit............................................................ $22.80 Annual fixed costs: Manufacturing overhead.......................................................................................... $199,000 Selling and administrative....................................................................................... $376,000 Total fixed costs................................................................................ $575,000 Forecasted annual sales volume (120,000 units)......................... $3,600,000 How many units would ABC Inc. have to sell in order to...
Product Cost Method of Product Pricing La Femme Accessories Inc. produces women's handbags. The cost of...
Product Cost Method of Product Pricing La Femme Accessories Inc. produces women's handbags. The cost of producing 1,300 handbags is as follows: Direct materials $14,800 Direct labor 7,000 Factory overhead 6,200 Total manufacturing cost $28,000 The selling and administrative expenses are $28,000. The management desires a profit equal to 15% 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. $...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT