Exercise 12-12A (Algo) How the allocation of fixed cost affects a pricing decision LO 12-3 Vernon Manufacturing Company expects to make 30,600 chairs during the Year 1 accounting period. The company made 4,200 chairs in January. Materials and labor costs for January were $17,700 and $25,000, respectively. Vernon produced 1,900 chairs in February. Material and labor costs for February were $8,300 and $12,800, respectively. The company paid the $612,000 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 Vernon desires to sell its chairs for cost plus 50 percent of cost, what price should be charged for the chairs produced in January and February? Note: Round intermediate calculations and final answers to 2 decimal places.
Exercise 12-12A (Algo) How the allocation of fixed cost affects a pricing decision LO 12-3 Vernon Manufacturing Company expects to make 30,600 chairs during the Year 1 accounting period. The company made 4,200 chairs in January. Materials and labor costs for January were $17,700 and $25,000, respectively. Vernon produced 1,900 chairs in February. Material and labor costs for February were $8,300 and $12,800, respectively. The company paid the $612,000 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 Vernon desires to sell its chairs for cost plus 50 percent of cost, what price should be charged for the chairs produced in January and February? Note: Round intermediate calculations and final answers to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 12-12A (Algo) How the allocation of fixed cost affects a pricing decision LO 12-3
Vernon Manufacturing Company expects to make 30,600 chairs during the Year 1 accounting period. The company made 4,200 chairs
in January. Materials and labor costs for January were $17,700 and $25,000, respectively. Vernon produced 1,900 chairs in February.
Material and labor costs for February were $8,300 and $12,800, respectively. The company paid the $612,000 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 Vernon desires to sell its chairs for cost plus 50 percent of cost, what price should be charged for the chairs produced
in January and February?
Note: Round intermediate calculations and final answers to 2 decimal places.
January
Price per unit
February
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