**Sarasota Company: Performance Swimsuit Cost Analysis**Sarasota Company specializes in making swimsuits for direct sale to retailers. Although the company offers a variety of suits, it does not currently produce the Performance suit, which is popular among highly skilled swimmers. According to market research, there is a strong market demand for this type of suit, and it is estimated to sell for approximately $100. Given Sarasota's manufacturing experience, the anticipated costs for producing the Performance suit are as follows:- **Direct materials:** $29- **Direct labor:** $35- **Manufacturing overhead:** $36**Total estimated manufacturing costs: $100****Cost-Plus Pricing Calculation**Assuming Sarasota implements a cost-plus pricing model, with a selling price set 25% above the production costs, the selling price for the Performance swimsuit can be calculated.**Selling Price Calculation:**Total cost = $100Markup (25% of total cost) = $100 * 0.25 = $25Selling price = Total cost + Markup = $100 + $25 = $125Therefore, under this pricing strategy, the Performance swimsuit would be priced at $125.

Manufacturers use different pricing methods when selling their products. Cost plus pricing is one of…

Sarasota Company makes swimsuits and sells these suits directly to retailers. Although Sarasota has a variety of suits, it does not make the Performance suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the Performance suit would sell for approximately $100. Given its experience, Sarasota believes the Performance suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs $29 35 36 $100

Sarasota Company makes swimsuits and sells these suits directly to retailers. Although Sarasota has a variety of suits, it does not make the Performance suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the Performance suit would sell for approximately $100. Given its experience, Sarasota believes the Performance suit would have the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total costs $29 35 36 $100

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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