Question

Assuming no direct factory overhead costs (i.e., inventory carry costs) and $3 million dollars in combined promotion and sales budget, the Dell product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at $35.00, what would they need to limit the material and labor costs to? Select: 1Save Answer $22.75 $24.50 $21.00 $23.00

Answer 1

$22.75

Step-by-step explanation:

Calculation for what they need to limit the material and labor costs

Using this formula

Limits for material and labor costs =Product price-(Contribution margin percentage ×Product price)

Let plug in the formula

Limits for material and labor costs=$35-(35%×$35)

Limits for material and labor costs=$35-$12.25

Limits for material and labor costs=$22.75

Therefore what they need to limit the material and labor costs will be $22.75