Oak Corp. makes two? products: C and D. The following data have been? summarized
ID: 2513697 • Letter: O
Question
Oak Corp. makes two? products: C and D. The following data have been? summarized: PRODUCT C: Direct material cost per unit -$500 Direct labor cost per unit - $500 Indirect manufacturing cost per unit- $396.00 Total Cost assigned = $1396.00 PRODUCT D Direct material cost per unit - $2000 Direct labor cost per unit - $200 Indirect manufacturing cost per unit - $958 Total cost assigned = $3158 Oak Corp. desires a 25?% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and? D, what would Oak have to charge the customer to achieve that gross? profit? Round to two decimal places. Begin by selecting the formula to compute the amount that the company should charge for each product.
Explanation / Answer
Total cost per unit / Product cost as a % of selling price = Required selling price per unit
When the gross prift rate = 25%, it implies that Product cost as a % of selling price = 75%
Total cost per Unit is given the question = Material + Labor + Indirect manufacturing
1396 for product - C and 3158 for product - D
Charge to the customer = 1396 / 0.75 = 1861.33 for product - C
Charge to the customer = 3158 / 0.75 = 4210.67 for product - D
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