1. The Calico Handbag’s main product is handbags. The cost to produce 800 handba
ID: 2579456 • Letter: 1
Question
1. The Calico Handbag’s main product is handbags. The cost to produce 800 handbags include :
a. Direct Material $15,000
b. Direct Labor 7,000
c. Factory Overherad 5,000
Total Manufacturing cost 27,000
The Selling and Administrative expenses are $24,000. Management desires a profit of 18% of the invested assets of $240,000.
Required:
A. Determine the amount of desired profit from the production and sale 800 handbags.
B. Determine the product cost per unit, selling price and profit per unit for the 800 handbags.
Explanation / Answer
A. Determine the amount of desired profit from the production and sale 800 handbags.
Desired profit = 240000*18% = 43200
B. Determine the product cost per unit, selling price and profit per unit for the 800 handbags.
Product cost per unit = 27000/800 = 33.75 per unit
Selling price per unit = (27000+24000+43200)/800 = 117.75
Profit per unit = 43200/800 = 54 per unit
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