n order to sell a product at a profit, the product must be priced higher than th
ID: 2721157 • Letter: N
Question
n order to sell a product at a profit, the product must be priced higher than the total cost to build the unit, plus period expenses and overhead. At the end of last year, Digby had their product Daze aimed at the Americas Budget segment. Use the Globe's Product Analysis to find Daze's production cost (labor + materials) in the Americas region. Exclude possible inventory carrying costs. Assume period expenses and overhead total 50% of their production cost. What is the minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead?
$5.69
$17.07
$23.00
$11.38
This link will take you to the account statements. Thanks
http://new.capsim.com/modules/compxm/student/pdfReportGDNA.cfm?Round=7&simid=GXM78994_012&AnnRep=0&attrSec=40129EFBF590FDD60C171022EE77CF10
Explanation / Answer
Answer
Minimum price of product Daze = Daze's production cost (labor + materials) in the Americas region + Period expenses and overhead (50% of their production cost)
= ($6.78 + $4.60) + 50% *($6.78 + $4.60)
= $ 11.38 + 50% *($ 11.38)
= $ 11.38 + $ 5.69
= $ 17.07
Answer: The minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead is $ 17.07
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.