Fit & Active Company is adding a new diet food concentrate called Body Fit & Healthy to its line of bodybuilding and exercise products. A plant is being built for manufacturing the new product. Management has decided to price the new product based on a 100 percent markup on total manufacturing costs. A direct cost budget for the new plant projects that direct department costs of \($6,500,000\) will be incurred in producing an expected normal output of 700,000 pounds of finished product. In addition, indirect costs for Administration and Technical Support will be shared by Body Fit & Healthy with the two exercise products divisions, Commercial Products and Retail Products. Budgeted annual data to be used in making the allocations are summarized here.

Direct costs are budgeted at \($410,000\) for the Administration Department and \($560,000\) for the Technical Support Department.
Required

a. Using the step method, determine the total direct and indirect costs of Body Fit & Healthy.

b. Determine the selling price per pound of Body Fit & Healthy. (Round calculations to the nearest cent.)

Transcribed Image Text:

Body Technical Commercial Administration Support 5 5 Retail Products Products 50 Fit & Healthy 30 20 1,500 1,250 750 Number of employees.... Amount of technical support time (hours) .... 500