Sour Sally is in the process of completing labor negotiations for the coming year. Part of...

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Sour Sally is in the process of completing labor negotiations for the coming year. Part of these negotiations call for an increase 10% in the base wage rate for direct labor from $20, with a corresponding increase in fringe benefits. At present, fringe benefits amount to 25% of total wages, and this percentage will remain unchanged with the new contract. The present labor standards call for 8 direct labor hours per unit of output. Other conversion costs amount to $50 per unit, of which 60% is for variable costs. Materials costs amount to $8 per unit. Administrative costs are fixed and amount to $10 per unit at the present production level. Products are sold with a gross margin of 25% on sales. 1.. Compute the current selling price of a unit of output 2.Compute the new selling price to be charged if there is no increase in productivity as a result of the new labor contract! Please explain! 3. Compute the selling price to be charged if the new labor contract were accompanied by a 20% increase in productivity! Please give your explanation! Sour Sally is in the process of completing labor negotiations for the coming year. Part of these negotiations call for an increase 10% in the base wage rate for direct labor from $20, with a corresponding increase in fringe benefits. At present, fringe benefits amount to 25% of total wages, and this percentage will remain unchanged with the new contract. The present labor standards call for 8 direct labor hours per unit of output. Other conversion costs amount to $50 per unit, of which 60% is for variable costs. Materials costs amount to $8 per unit. Administrative costs are fixed and amount to $10 per unit at the present production level. Products are sold with a gross margin of 25% on sales. 1.. Compute the current selling price of a unit of output 2.Compute the new selling price to be charged if there is no increase in productivity as a result of the new labor contract! Please explain! 3. Compute the selling price to be charged if the new labor contract were accompanied by a 20% increase in productivity! Please give your explanation!

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1 To compute the current selling price of a unit of output we need to consider all costs and add a profit margin The total cost per unit can be calcul... View the full answer