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Mayfair Furniture is considering the production of an automatic reclining office chair that the company would price at a markup of 30% above full cost.
Mayfair Furniture is considering the production of an automatic reclining office chair that the company would price at a markup of 30% above full cost. Management estimates that the variable cost of each chair will be $80 and total fixed costs per year will be $34,000.
a. Assuming sales of 800 chairs, what is the full cost of a chair?
b. Assume that the quantity demanded at the price calculated in part a. is only 680 chairs. What is the full cost of each chair and what is the anticipated selling price?
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