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Mademoiselle Company produces women's handbags. The cost of producing 1,210 handbags is as...

Question:

Mademoiselle Company produces women's handbags. The cost of producing 1,210 handbags is as follows:

Direct materials$15,900
Direct labor8,100
Factory overhead5,600
Total manufacturing cost$29,600

The selling and administrative expenses are $28,200. The management desires a profit equal to 18% of invested assets of $498,000.

a. Determine the amount of desired profit from the production and sale of 1,210 handbags.

b. Determine the product cost per unit for the production of 1,210 handbags.

c. Determine the product cost markup percentage for handbags.

d. Determine the selling price of handbags.

Desired Profit:

The desired profit is the profit that a business unit wants to earn from its business operation. To earn the desired profit the management prepares plans and implement to earn the desired profit.

Answer and Explanation:

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a)The amount of desired profit is 18% of the invested assets of $498,000. 18% x $498,000 = $89,640

b)Product Cost per Unit equals total...

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How to Calculate Markup: Definition & Formula

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Chapter 12 / Lesson 22
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