Question
Net sales for the year were $950,000 and cost of goods sold was $646,000 for the companys existing products. A new product is presently under
Net sales for the year were $950,000 and cost of goods sold was $646,000 for the companys existing products. A new product is presently under development and will have an expected selling price of not more than $66 per unit in order to remain competitive with similar products in the marketplace. Required: a. Calculate gross profit and the gross profit ratio for the year.
a.
net sales | % | ||
Cost of goods sold | % | ||
Gross Profit | % |
b.
What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the companys gross profit ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
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