Mallett Manufacturing Co. expects to make 30,400 chairs during the 2011 accounti

Question

Mallett Manufacturing Co. expects to make 30,400 chairs during the 2011 accounting period. The company made 3,300 chairs in January. Materials and labor costs for January were $18,000 and $25,200, respectively. Mallett produced 1,200 chairs in February. Material and labor costs for February were $8,100 and $13,800, respectively. The company paid the $729,600 annual rental fee on its manufacturing facility on January 1, 2011. Assuming that Mallett 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?

Explanation / Answer

rental fee at per chair = 729600/30400 = 24/chair cost in january = 18000+25200 + 3300*24 = 122400 so sales should be = 1.5*122400 = 183,600 sales price = 183600/3300 = 55.63 cost in February = 8100+13800+ 1200*24 = 50700 sales should be = 1.5*50700 = 76050 sales price = 76050/1200 = 63.37

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