A supplier indicates a 20% increase in labor costs and demands a 20% increase in purchasing price. What is the current purchasing price? What should be the new purchasing.price? How much increase is this compared to what supplier is asking? Complete the table below. Show your calculations. Recent Cost Breakdown and Price Material Labor Overhead (120% of labor) Tooling Factory Cost SGA Expense (10% of Factory cost) Total Cost Markup (12% of total cost) Purchasing price Requested price $0.5 $1.50 $1.8 $0.5 $4.3 6.35 With 20% Increased Labor $0.5 $1.8
A supplier indicates a 20% increase in labor costs and demands a 20% increase in purchasing price. What is the current purchasing price? What should be the new purchasing.price? How much increase is this compared to what supplier is asking? Complete the table below. Show your calculations. Recent Cost Breakdown and Price Material Labor Overhead (120% of labor) Tooling Factory Cost SGA Expense (10% of Factory cost) Total Cost Markup (12% of total cost) Purchasing price Requested price $0.5 $1.50 $1.8 $0.5 $4.3 6.35 With 20% Increased Labor $0.5 $1.8
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
M1
Transcribed Image Text:Cost breakdown problem:
A supplier indicates a 20% increase in labor costs and demands a 20% increase in purchasing price.
What is the current purchasing price?
What should be the new purchasing.price?
How much increase is this compared to what supplier is asking?
Complete the table below. Show your calculations.
Recent Cost Breakdown and
Price
Material
Labor
Overhead (120% of labor)
Tooling
Factory Cost
SGA Expense (10% of Factory
cost)
Total Cost
Markup (12% of total cost)
Purchasing price
Requested price
$0.5
$1.50
$1.8
$0.5
$4.3
6,35
With 20% Increased Labor
$0.5
$1.8
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