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In: Accounting

La Femme Accessories Inc. produces women's handbags. The cost of producing 1,180 handbags is as follows:...

La Femme Accessories Inc. produces women's handbags. The cost of producing 1,180 handbags is as follows:

Direct materials $15,500
Direct labor 8,400
Factory overhead 6,400
Total manufacturing cost $30,300

The selling and administrative expenses are $27,400. The management desires a profit equal to 18% of invested assets of $498,000.

If required, round your answers to nearest whole number.

a. Determine the amount of desired profit from the production and sale of 1,180 handbags.
$

b. Determine the product cost per unit for the production of 1,180 handbags.
$per unit

c. Determine the product cost markup percentage for handbags.
%

d. Determine the selling price of handbags. Round your answers to nearest whole value.

Cost $per unit
Markup $per unit
Selling price $per unit

Solutions

Expert Solution

Determine the amount of desired profit from the production and sale of 1,180 handbags.

desired profit 498000*18% $ 89,640.00

Determine the product cost per unit for the production of 1,180 handbags.

Direct materials $15,500
Direct labor 8,400
Factory overhead 6,400
Total Cost $30,300
No of Units 1180
$per unit 30300/1180
 $                     26

c. Determine the product cost markup percentage for handbags.

Total Cost $       30,300.00
selling and administrative expenses $       27,400.00
Total Cost $       57,700.00
desired profit 498000*18% $       89,640.00
Markup =89640/57700

155%

d. Determine the selling price of handbags. Round your answers to nearest whole value.

Cost (57700/1180) $                     49
Markup 155%
Selling price $                   125

ekkarill92 answered 4 months ago
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