Question

In order to sell a product at a profit, the product must be priced higher than the total cost to build the unit, plus period expenses and overhead. At the end of last year, Digby had their product Daze aimed at the Americas Budget segment. Use the Globe's Product Analysis to find Daze's production cost (labor materials) in the Americas region. Exclude possible inventory carrying costs. Assume period expenses and overhead total 50% of their production cost. What is the minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead

Answer 1

$17.02.

Step-by-step explanation:

Complete question: Name Daze Units Sold 987 Price $23 Customer Satisfaction 21 Accuracy 7.2 Speed 7.2 Service Life 14,000 Age 3.3 Region Kit Yes Material Costs $6.79 Labor Costs $4.56 Contribution Margin 49.27% . What is the minimum price the product could have been sold for in the American region to cover the unit cost, period expenses, and overhead?

Minimum price of the product = (6.79+4.56)*150%

Minimum price of the product = $17.02

Since, period expenses and overhead costs are 50% of production costs which are $11.35, the minimum price of the product is $17.02.