You own a jeans manufacturing business and need to determine the retail selling price for your jeans. Fill in all of the blanks to determine your selling price on cost and/or on selling price. Refer to your formula sheet to solve.

1a. Determine Total Fixed costs

Management and other nonproduction-related salaries $ 750,000

Rental of factory 600,000

Insurance 50,000

Depreciation on equipment 100,000

Advertising 500,000

Total Fixed Costs $

1.b. Determine Fixed Costs per unit $

Number of units produced = 400,000

1.c. Determine Variable costs per unit

Cost of materials, (fabric, zippers, thread, etc) $ 7.00

Cost of Production labor 10.00

Cost of utilities, and supplies used in production process 3.00

1.d. Variable Cost per unit $

1.e. Total Cost per unit $

1.f. Total cost for producing 400,000 units $

Step 2: Determine markup and selling price

Refer formula sheet in the markup section

Manufacturers selling price to the retailer assuming a 20% markup on cost $

Retailers selling price assuming 40% markup on selling price $

Alternative Retailers selling price assuming a 40% markup on cost $

FANCY RETAIL STORE, INC. (FRS) INCOME STATEMENT For the Year Ended December 31, 20XX $500,000 Gross Sales Less: Sales Returns & Allowances $8,000 Sales Discounts 5.000 13,000 Net Sales Revenue $487,000 $80,000 Cost of Goods Sold Inventory, January 1, 20XX Purchases Less: Purchase Returns/Allow. Purchase Discounts Net Purchases Plus: Freight-In Goods Available for Sale Less: Inventory, Dec. 31, 20XX Cost of Goods Sold Gross Margin $200,000 1,000 500 198.500 2,500 201,000 281,000 65.000 216,000 271,000 25,000 25,000 1.000 1.000 Operating Expenses Salaries Rent Depreciation Supplies Total Operating Expenses Operating Income Other Revenue and (Expenses) Interest Revenue Income Before Tax 52.000 219,000 5,000 5,000 224,000 Taxes (30%) Net Income 67,200 $156,800