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Gerber Clothing Inc. has designed a rain suit for outdoor enthusiasts that is about to be introduced on the market A standard cost card has

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Gerber Clothing Inc. has designed a rain suit for outdoor enthusiasts that is about to be introduced on the market A standard cost card has been prepared for the new suit, as follows Quantity orh or Rate Cost 2.5 metres $10.00 per metre $25.00 28.00 Direct materials Direct labour Manufacturing overhead (1/6 variable) 10 hours 24.00 per hour24.00 1.0 hours 28.00 per hour Total standard cost per suit $ 77.00 a. The only variable selling and administrative costs will be $4 per suit for shipping. Fixed selling and administrative costs will be as follows (per year)y Salaries Advertising and other S 45,000 200,000 Total $245,000 b. Since the company manufactures many products, it is felt that no more than 10,000 hours of labour time per year can be devoted to production of the new suits c. An investment of $500,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment. The company wants a 20% ROI in new product lines d Manufacturing overhead costs are allocated to products on the basis of direct labour-hours, Required: 1. Assume that the company uses the absorption approach to cost- plus pricing a. Compute the markup that the company needs on the rain suits to achieve a 20% Rol if it sells all of the suits it can produce using 10.000 hours of labour time arkup percentage

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