2. The company Montera manufactures a number of different products and they use cost calculations to calculate the necessary price they will charge. Once a year, they review the mark-up rate so that they match the actual costs. They use traditional mark-up bases and the mark-up base this year are as follows: Material-overhead: 19%, Manufacturing-overhead: 55% and selling & administrative-overhead: 25%. They must now calculate product A expenses which contains the following materials (amount in SEK): 1 rubber plate 4 plastic 2 wooden-boards 8 smaller wooden-boards 1 package 5,10 0,90 2,60 0,50 1,20 The direct wage costs for assembly are SEK 60/piece. The quote they are counting on refers to 4,000 pieces. This order will require special direct costs in the form of tools and other stuff for 19,200 SEK (for the entire order). a) a) What is the lowest price for the entire order if you want a 20% profit mark-up? The calculation of the lowest price must be done by producing a cost estimate for the product. For the sake of clarity, the company wants a cost estimate per piece (ie for product A), which is then used to calculate the price for the entire order. b) Give examples of situations where it is NOT appropriate to use direct salary as a distribution base for production costs and at the same time suggest another distribution base and justify your proposal. 2. The company Montera manufactures a number of different products and they use cost calculations to calculate the necessary price they will charge. Once a year, they review the mark-up rate so that they match the actual costs. They use traditional mark-up bases and the mark-up base this year are as follows: Material-overhead: 19%, Manufacturing-overhead: 55% and selling & administrative-overhead: 25%. They must now calculate product A expenses which contains the following materials (amount in SEK): 1 rubber plate 4 plastic 2 wooden-boards 8 smaller wooden-boards 1 package 5,10 0,90 2,60 0,50 1,20 The direct wage costs for assembly are SEK 60/piece. The quote they are counting on refers to 4,000 pieces. This order will require special direct costs in the form of tools and other stuff for 19,200 SEK (for the entire order). a) a) What is the lowest price for the entire order if you want a 20% profit mark-up? The calculation of the lowest price must be done by producing a cost estimate for the product. For the sake of clarity, the company wants a cost estimate per piece (ie for product A), which is then used to calculate the price for the entire order. b) Give examples of situations where it is NOT appropriate to use direct salary as a distribution base for production costs and at the same time suggest another distribution base and justify your proposal