Moonshine Corp. uses the PRODUCT COST CONCEPT of applying the cost-plus approach

Question

Moonshine Corp. uses the PRODUCT COST CONCEPT of applying the cost-plus approach to product pricing. The costs and expenses of producting and selling 38,400 units of their Moonshine cups are as follows: VARIABLE COSTS: Direct Materials $4.70 Direct Labor $2.50 Factory Overhead $1.90 Selling & Admin expenses $2.60 Total Variable Costs $11.70 FIXED COSTS: Factory Overhead $80,000 Selling & Admin expenses 14,000 Moonshine Corp. desires a profit equal to 14% rate of return on invested assests of $640,000. a) determine the amount of desired profit from the production and sale of the cups? b) determine the Total Product Cost and the Product Cost per Unit for the productionand sale of 38,400units of cups. c) determine the mark-up percentage for the cups d)determine the selling price of cups 6 minutes ago - 4 days left to answer.

Explanation / Answer

Part A: 640000*.14 = 89600 Part B: Total Product Cost = 11.70*38400 + 80000 + 14000 = 543280 Product Cost Per Unit = 543280/38400 = 14.15 Part C: 14.16% Part D: Sales = 632880 (89600+183600+449280)/38400 = 16.48

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