Question

Perez Manufacturing Co. expects to make 30,300 chairs during the 2017 accounting period. The company made 4,700 chairs in January. Materials and labor costs for January were $17,100 and $25,500, respectively. Perez produced 2,300 chairs in February Material and labor costs for February were $9,300 and $13,600, respectively. The company paid the $484,800 annual rental fee on its manufacturing facility on January 1, 2017 Required Assuming that Perez desires to sell its chairs for cost plus 10 percent of cost, what price should be charged for the chairs produced in January and February? (Round intermediate calculations and final answers to 2 decimal places.) January February Price

Answer 1

Answer

	January	February
Price	$27.57	$28.55 [or $ 28.56]

--Working

		January	February
	Material cost	$17,100	$9,300
	Labor Cost	$25,500	$13,600
A	Total Variable cost	$42,600	$22,900
B	Units produced	4700	2300
C = A/B	Variable cost per unit	$9.06	$9.96
D	Manufacturing Overhead rate ($484800/30300 units)	$16.00	$16.00
E = C+D	Total Cost per unit	$25.06	$25.96
F = E x 10%	Markup 10%	$2.51	$2.60
G = E+F	Price	$27.57	$28.55