28. Southview Company is hoping to launch a new product that will cost $90 in direct materials...

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28. Southview Company is hoping to launch a new product that will cost $90 in direct materials and $100 in direct labor per unit. Startup and development costs should total $15,000,000, and fixed costs will be $300,000 per year. Variable manufacturing overhead is estimated at 60% of direct labor costs. Southview plans to pay its salespeople a 10% commission on the product.

Southview hopes to earn a markup of 20% on full costs. Sales are expected to average 50,000 units per year over the product’s 10-year life.

What price should be set for the product?

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