tonemaier Manufacturing Inc. has begun production on a new product. The primary cost of the product is direct materials with a cost of $1,050. Direct labor is estimated to be $285 per unit, overhead is estimated to be $120 per unit, and selling and administrative expenses are estimated to be $75 per unit. Stonemaier desires a profit of $480 per unit. ----------------------------- What is the required markup percentage on direct materials in order to achieve the desired profit? (provide your answer in decimal format to two decimal places --> i.e. 53.4% = 0.53)

tonemaier Manufacturing Inc. has begun production on a new product. The primary cost of the product is direct materials with a cost of $1,050. Direct labor is estimated to be $285 per unit, overhead is estimated to be $120 per unit, and selling and administrative expenses are estimated to be $75 per unit. Stonemaier desires a profit of $480 per unit. ----------------------------- What is the required markup percentage on direct materials in order to achieve the desired profit? (provide your answer in decimal format to two decimal places --> i.e. 53.4% = 0.53)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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Question

tonemaier Manufacturing Inc. has begun production on a new product. The primary cost of the product is direct materials with a cost of $1,050.

Direct labor is estimated to be $285 per unit, overhead is estimated to be $120 per unit, and selling and administrative expenses are estimated to be $75 per unit.

Stonemaier desires a profit of $480 per unit.

-----------------------------

What is the required markup percentage on direct materials in order to achieve the desired profit? (provide your answer in decimal format to two decimal places --> i.e. 53.4% = 0.53)

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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