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Vaughn Company makes swimsuits and sells these suits directly to retailers. Although Vaughn has a variety of suits, it does not make the All-Body suit
Vaughn Company makes swimsuits and sells these suits directly to retailers. Although Vaughn has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Vaughn believes the All-Body suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs $23 32 45 $100 (21) Assume that Vaughn uses cost-plus pricing, setting the selling price 28% above its costs What would be the price charged for the All Body swimsuit? Selling price $ e Textbook and Media (c) What is the highest acceptable manufacturing cost Vaughn would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $29 per unit? (Assume target costing.) Target cost $ e Textbook and Media
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