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Determine the relevant costs for setting the price of an aluminum step ladder based on the information below for the existing operation. Show the total
Determine the relevant costs for setting the price of an aluminum step ladder based on the information below for the existing operation. Show the total relevant cost per ladder. Fixed manufacturing plant costs are $750,000 per year. Plant capacity is 500,000 ladders per year. 50% of your current aluminum inventory was purchased at a price of $1.448 per ton, 25% was purchased at a price of $1.875 per ton and 25% was purchased at a price of $1,116 per ton. Direct labor costs are $11.00 per ladder. The current market price of aluminum is $1,572 per ton. 500 ladders can be produced from 1 ton of aluminum. . Based on expected lifetime ladder sales of 2,400,000 units, the research and development costs for this particular version of the ladder works out to be $37.50 per ladder
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