Question
Style plans to manufacture one-piece high end womens casual wear. The company expects to have two models, the Slumber and the Onesie. The company will
Style plans to manufacture one-piece high end womens casual wear. The company expects to have two models, the Slumber and the Onesie. The company will use activity-based costing to apply its estimated $371,000 of overhead costs to its products. The Slumber is double lined and is made by the more experienced seamstresses. The Onesie has many subtle designs and needs more inspection hours. Information about its overhead follows: Activity (Cost Driver) Estimated MOH Expected Activity Total Slumber Onesie Assembly (Labour Hours) $ 36,000.00 8,000 6,000 2,000 Quality Control (Inspection Hours) $ 95,000.00 2,000 800 1,200 Plant Administration (feet of Fabric) $ 240,000.00 15,000 9,500 5,500 $ 371,000.00 Slumber Onesie Direct Material $ 235.00 $ 120.00 Direct Labour $ 120.00 $ 90.00 # feet of fabric per garment 10 4 Cindy knows the high-end casual wear market. Products like the Slumber retail for $999 and the Onesie sell for $475. Cindy would like you to suggest a selling price for the Slumber and Onesie keeping in mind that she would like these products to be competitive in the market space and have a mark-up of minimally 60%.
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