Question
Sage Company uses an activity-based costing system. Consider the following information: Manufacturing ActivityCost Driver UsedCost per Unit of ConversionAreaas Application BaseApplication Base Machine setupNumber of
Sage Company uses an activity-based costing system. Consider the following information:
Manufacturing ActivityCost Driver UsedCost per Unit of ConversionAreaas Application BaseApplication BaseMachine setupNumber of setups$165Material handlingNumber of parts$16MillingMachine hours$47AssemblyDirect labour hours$27
During the past month, 55 units of a component were produced. 3 setups were required. Each unit needs 33 parts, 5 direct labour hours, and 7 machine hours. Direct materials cost $132 per finished unit. All other costs are classified as conversion costs.
If the company would like its gross margin to be 34% of sales, what price should it charge per unit of the component? (Round entry to whole amount, e.g. 5,725.)
Price$
per unit
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