Question
Wagon Wheels manufactures personalized wagons for toddlers. Each wagon goes through a woodworking process, painting, and assembly. Wagon Wheels produces and sells 7,200 wagons per
Wagon Wheels manufactures personalized wagons for toddlers. Each wagon goes through a woodworking process, painting, and assembly. Wagon Wheels produces and sells 7,200 wagons per year. Wagon Wheels owners have invested $55,000 in the business and desire a return of 15%. Wagon Wheels costs includea) Determine the mark-up percentage using absorption cost-based pricing.
b) Determine the mark-up percentage using variable cost-based pricing.
c) Determine the selling price based on absorption cost-based pricing.
d) Determine the selling price based on variable cost-based pricing.
e) Discuss at least 2 other factors that Wagon Wheels must consider when setting their selling price.
Wagon Wheels manufactures personalized wagons for toddlers. Each wagon goes through a woodworking process, painting, and assembly. Wagon Wheels produces and sells 7,200 wagons per year. Wagon Wheels' owners have invested $55,000 in the business and desire a return of 15%. Wagon Wheels costs include Variable Fixed Direct labour salaries $240,000 per year Office staff $30,000 per year Materials $45 per wagon Supplies $4,000 per year Marketing $3.50 per wagon $2,400 per year Overhead $1.50 per wagon $850 per yearStep by Step Solution
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