In respect of a factory, the following figures have been obtained for the year 2014. Cost of
Question:
In respect of a factory, the following figures have been obtained for the year 2014. Cost of material $ 600,000, Direct Wages $ 500,000; Factory overheads $ 300,000; Administration overheads $ 336,000.00; Selling overheads $ 224,000; Distribution overheads $ 140,000 and profit $ 420,000.
A work order has been executed in 2015 and the following expenses have been incurred; Materials $ 8,000 and Wages $ 5,000.
Assuming that in 2015 the factory overheads has increased by 20%, distribution overheads have gone down by 10% and selling and administration overheads have each gone up by 12.5%;
Required;
At what price should the product be sold so as to earn the same profit on selling price as in 2014?
Factory overhead is based on direct wages while all the other overheads are based on factory cost.
Expert Answer:
Answer To find the selling price that would allow the company to earn the same profit on selling pri... View the full answer
