Mademoiselle Company produces women\'s handbags. The cost of producing 1,200 han

ID: 2379138 • Letter: M

Question

Mademoiselle Company produces women's handbags. The cost of producing 1,200 handbags is as follows:

The selling and administrative expenses are $28,000. The management desires a profit equal to 16% of invested assets of $500,000.

If required, round your answers to nearest whole number.

a. Determine the amount of desired profit from the production and sale of 1,200 handbags.

b. Determine the product cost per unit for the production of 1,200 handbags.

c. Determine the product cost markup percentage for handbags.

d. Determine the selling price of handbags. Round your answers to nearest whole value.

a. amount of desired profit = 16%*500000 =$80,000

b. product cost = direct material, direct labor, and manufacturing overhead

product cost per unit = 30000/1200=$25 per unit

c.let the selling price be s

Revenue - Costs = Profit

s*1200-25*1200-28000 = 80000

s= 115

(1+Markup)*Product Cost = Selling price

Mark up = 115/25-1 = 360%

d. selling price of handbags = $115

calculated above

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