Question

Franklin manufacturing co. expects to make 31,800 chairs during the year 1 accounting period. the company made 3,900 chairs in january. materials and labor costs for january were $17,100 and $24,200, respectively. franklin produced 2,200 chairs in february. material and labor costs for february were $9,800 and $12,300, respectively. the company paid the $731,400 annual rental fee on its manufacturing facility on january 1, year 1. the rental fee is allocated based on the total estimated number of units to be produced during the year.

Required

Assuming that Perez desires to sell its chairs for cost plus 15 percent of cost, what price should be charged for the chairs produced in January and February? (Round intermediate calculations and final answers to 2 decimal places.)

What is the price for the month of January and February (Please be detailed)?

Answer 1

To determine the selling price of chairs for January and February for Franklin Manufacturing Co., we calculate the cost per chair by including materials, labor, and a portion of the annual rental fee, then add a 15% markup. The price per chair will differ for each month, reflecting changes in production quantities and costs.

Step-by-step explanation:

To calculate the price that should be charged for the chairs produced by Franklin Manufacturing Co. in January and February, we need to determine the cost per chair for each month and then add a markup of 15 percent. For January, a total of 3,900 chairs were produced at a material and labor cost of $17,100 and $24,200 respectively. Additionally, the annual rental fee of $731,400 needs to be allocated to each chair based on the estimated annual production.

The monthly rental cost per chair in January is calculated by dividing the annual rental fee by the total estimated number of units to be produced during the year (31,800 chairs), and then by the number of chairs produced in January (3,900 chairs). The same method applies for February, where 2,200 chairs were made. We then calculate the total cost per chair for each month by adding the materials, labor, and allocated rental fee per chair. The final step is to apply the markup by adding 15 percent to the total cost per chair to get the selling price.

It's important to round intermediate calculations and the final selling price to two decimal places. Additionally, we must consider that the price could vary for each month due to different production quantities and costs incurred.