Rock Hill Relaxation Company sells vitamin supplements. They have collected the following budgot information about the 10,000 bottles of supplemente they expect to sell; Total Direct Material Cost $27,000, Total Direct Labor Cost $15,000, Total Manufacturing Overhead Cost $12,000, Total Selling and Administrative Expenees $3,000. Rock Hill's desired profit is a 50% return on investment of their $90,000 of total assets. At what amount should Rock Hill price its supplements, II they are using the Product Cost Method of prieing? a) $5.30 b.) $10.70 c) $15.75 d) $13.65

Question

Rock Hill Relaxation Company sells vitamin supplements. They have collected the following budgot information about the 10,000 bottles of supplemente they expect to sell; Total Direct Material Cost  $27,000, Total Direct Labor Cost  $15,000, Total Manufacturing Overhead Cost  $12,000, Total Selling and Administrative Expenees  $3,000. Rock Hill's desired profit is a  50% return on investment of their  $90,000 of total assets. At what amount should Rock Hill price its supplements, II they are using the Product Cost Method of prieing? a)  $5.30 b.)  $10.70 c)  $15.75 d)  $13.65

Bytelearn · Accepted Answer

Calculate Total Product Cost: Calculate the total product cost. Total product cost includes direct material cost, direct labor cost, and manufacturing overhead cost. Total Product Cost = Total Direct Material Cost + Total Direct Labor Cost + Total Manufacturing Overhead Cost Total Product Cost = $27,000 + $15,000 + $12,000 Total Product Cost = $54,000Calculate Desired Profit: Calculate the desired profit. Rock Hill's desired profit is a 50% return on investment of their $90,000 of total assets. Desired Profit = 50% of Total Assets Desired Profit = 0.50 * $90,000 Desired Profit = $45,000Calculate Total Cost: Calculate the total cost including desired profit. Total Cost = Total Product Cost + Desired Profit Total Cost = $54,000 + $45,000 Total Cost = $99,000Calculate Price per Bottle: Calculate the price per bottle. To find the price per bottle, divide the total cost by the number of bottles expected to be sold. Price per Bottle = Total Cost / Number of Bottles Price per Bottle = $99,000 / 10,000 bottles Price per Bottle = $9.90Add Expenses to Price: Add the selling and administrative expenses per bottle to the price. Total Selling and Administrative Expenses = $3,000 Selling and Administrative Expenses per Bottle = Total Selling and Administrative Expenses / Number of Bottles Selling and Administrative Expenses per Bottle = $3,000 / 10,000 bottles Selling and Administrative Expenses per Bottle = $0.30Calculate Final Price: Calculate the final price per bottle using the Product Cost Method. Final Price per Bottle = Price per Bottle + Selling and Administrative Expenses per Bottle Final Price per Bottle = $9.90 + $0.30 Final Price per Bottle = $10.20

Full solution

More problems from Solve quadratic equations: word problems

Related topics