Using reverse analysis, what is the estimated cost (sum of labor, material and overhead) for this supplier to produce these chemicals?

A supplier gives you a price of $400 for a barrel of specialized chemicals. Included in this price is a per barrel set up charge of (tooling) $40.50. The industry they are part of operates at 10% profit and 5% SGA; both profit and SGA are a percentage of the selling price.

• a. $299.50
• b. $340.00
• c. $360.00
• d. $400.00
• e. None of the above