Using reverse analysis, what is the estimated cost (sum of labor, material and overhead) for this supplier to produce these chemicals?

“A supplier gives you a price of $400 for a barrel of specialized chemicals. Included in this price is a per barrel set up charge of (tooling) $40.50. The industry they are part of operates at 10% profit and 5% SGA; both profit and SGA are a percentage of the selling price.”

Answer rating: 100% (QA)

To estimate the cost of production sum of labor material and overhead for the supplier we can use ... View the full answer