Q5 Estimating the unit production cost from the following data, determine if the
ID: 1093547 • Letter: Q
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Q5 Estimating the unit production cost from the following data, determine if the product will provide a 20% profit if the selling price is set at $1000. Labor = 16.8 hours at $15.87/hour Factory overhead = 150% of labor Material cost = $50.10 Packing cost = 10% of labor Subcontract cost = $10.20 Sales commission =10% of selling price Profit = 20% of selling price Selling price per unit Labor cost Factory Overhead Material cost Packing cost Subcontract cost Total cost Profit per unit Expected profit per unit Profit expectation realized?Explanation / Answer
Selling price per unit = $1000
Labor Cost = 16.8 * 15.87 = $266.616
Factory Overhead = 150% of labor = 1.5 * 266.616 = $399.924
Material Cost = $50.10
Packing Cost = 10% of labor = 0.10 * 266.616 = $26.6616
Subcontract Cost = $10.20
Total Cost = $753.5
Profit per unit = $1000 - $753.5 = $246.5
Sales Commission = 10% of selling price = $100
Expected profit per unit = 20% of $1000 = $200
Profit expectation realized - No since after sales commission profit = $146.5
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