Presidential candidate Williard \"Mitt\" Romney wants to order 10,000 red flip f

Question

Presidential candidate Williard "Mitt" Romney wants to order 10,000 red flip flops to hand out at campaign stops. The left one will read "I'm for it" while the right one will read "I'm against it." He contacts Politically Expedient Footwear to make this custom order. Politically Expedient Footwear currently expects to make 1,090,000 flip flops next month with the total monthly fixed costs of $8,675,309. Each pair of flip flops involves $1.50 of materials and $0.57 of labor. However, in order to make them red, the company will need to send out the flip flops to a vendor. The vendor charges a flat fee of $50,000 plus $0.06 per unit. If Politically Expedient Footwear prices the order with a 34% markup, what price should it charge per pair of flip flops?

Explanation / Answer

Price per flip flop to be charged = $20.3 Working: 8675309 +1.5*1090000 +.57*1090000 =$10931609 for 1090000 Cost per pair = $ 10.028 Addition cost per pair: 50000+(.06*20000) = 52000 for 10000 Additional cost per piece = $5.12 Markup 34% of 10.028+5.12 = 5.15 So Price = $20.3

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