Question

Grounded Coffee Products manufactures coffee tables. Grounded Coffee Products has a policy of adding a​ 20% markup to full costs and currently has excess capacity. The following information pertains to the​ company's normal operations per​ month:

Output units	​30,000 tables
​Machine-hours	​6,000 hours
Direct manufacturing​ labor-hours	​10,000 hours
Direct materials per unit	​$50
Direct manufacturing labor per hour	​$12
Variable manufacturing overhead costs	​$322,500
Fixed manufacturing overhead costs	​$1,200,000
Product and process design costs	​$600,000
Marketing and distribution costs	​$1,290,000

For​ long-run pricing of the coffee​ tables, what price will most likely be used by Grounded​ Coffee?

Answer 1

$50 t Explanation or Direct materials Direct manufacturing labour ($12 x 30,000 30,000 variable manufacturing I $ 322,500 to $ 10.75 30,000 Fixed manufacturi $1,200,000) 30,000 product and process design costs $600.000) L 30,000 $ $43 Marketing and distribution r $1,290,000 30,000 $167.75 $ 33. 55 Full cost per unit Mark-up (20%) Estimated selling price $ 201:30