Question
Smith and Company manufacture one inch drills which sell for $15 per unit in the wholesale market. Last year they manufactured and sold 5000 units
Smith and Company manufacture one inch drills which sell for $15 per unit in the wholesale market. Last year they manufactured and sold 5000 units and incurred the following cost:
Direct materials........................$25,000
Direct labor................................$17,500
Indirect materials......................$9,000
Manufacturing overhead... $16,000
It is Top management policy to maintain the present gross margin percentage. What price should the company charge for its one inch drill if sales are expected to go up to 7000units and $9600 of Manufacturing overhead is fixed.
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