The Cinnamon Company’s normal sales volume is 500,000 units. The unit cost to make and sell the product is as follows: Direct materials P50.00 Direct Labor 25.00 Variable factory overhead 10.00 Fixed factory overhead 15.00 Variable selling and administrative expenses 8.00 Fixed selling and administrative expenses 7.00 Beginning 2012, replacement cost of direct material is P55 per unit, labor contract provides and increase of 20% and variable selling costs increase by 10%. Sales discount averages 3% on gross sales. REQUIRED: Compute the unit selling price to be set up if management desires a profit of 25% based on full costs.
The Cinnamon Company’s normal sales volume is 500,000 units. The unit cost to make and sell the product is as follows:
Direct materials P50.00
Direct Labor 25.00
Variable factory
Fixed factory overhead 15.00
Variable selling and administrative expenses 8.00
Fixed selling and administrative expenses 7.00
Beginning 2012, replacement cost of direct material is P55 per unit, labor contract provides and increase of 20% and variable selling costs increase by 10%. Sales discount averages 3% on gross sales.
REQUIRED: Compute the unit selling price to be set up if management desires a profit of 25% based on full costs.
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