Exercise 22-3 (Part Level Submission) Hannon Company makes swimsuits and sells t

Question

Exercise 22-3 (Part Level Submission) Hannon Company makes swimsuits and sells these suits directly to retailers. Although Hannon has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Hannon believes the All-Body suit would have the following manufacturing costs. Assume that Hannon uses cost-plus pricing, setting the selling price 20% above its costs. What would be the price charged for the All-Body swimsuit? (Round answer to 2 decimal places, e.g. 10.50.) Selling price $ The parts of this question must be completed in order. This part will be available when you complete the part above.

Explanation / Answer

Hence Selling price is $ 120

Cost of the product = 100 Margin required on cost plus pricing is 20 % above cost Hence Selling price = Cost of the product * 120% = 100*120/100 =    120

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