Bunkowske Company plans to introduce a new product next year. This product has a two-year life and an estimated demand of 20,000 units annually. The product will be produced 50 weeks each year. Bunkowske estimates the following costs:
• Direct materials will be $ 16 per unit.
• Setup costs will be $ 200 per week. Ten setups will be required per week.
• Design costs will be $ 40,000 in total.
• Specialized equipment must be rented for $ 15,000 per week.
• Research and development costs are estimated at $ 500,000.
• Labor will be paid $ 20 per hour.
Five employees will be assigned to this product and each employee will work 35 hours on the product. Bunkowske Company uses cost-plus pricing whereby the selling price of each of its product is 150 percent of the life-cycle costs. Determine the selling price of this product.

  • CreatedMarch 25, 2015
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