Oxmoor Manufacturing Co. expects to make 31,800 chairs during the current accounting period. The...

Question:

Oxmoor Manufacturing Co. expects to make 31,800 chairs during the current accounting period. The company made 3,400 chairs in January. Materials and labor costs for January were $17,200 and $24,700, respectively. Oxmoor produced 1,300 chairs in February. Material and labor costs for February were $8,900 and $12,900, respectively. The company paid the $636,000 annual rental fee on its manufacturing facility on January 1. Required Assuming that Oxmoor desires to sell its chairs for cost plus 40 percent of cost, what price should be charged for the chairs produced in January and February?

Selling Price:

Selling price refers tot he the price at which the products are offered to the customers. This includes the cost fo the product and the margin which the company wanst to earn on every product.

Answer and Explanation:

Statement of Cost and Selling Price

Jan Feb
No. of Chairs 3400 1300
$ $
Materials $17,200 $8,900
Labor $24,700 $12,900
Rental Fee $68,000 No variable 636,000/$31,800*$3,400 defined. $26,000 No variable 636,000/$31,800*$1,300 defined.
Total Cost $109,900 $47,800
Add: Profit $43,960 $19,120
Sales $153,860 $66,920
Selling Price per chair $45.25 $51.48

Note- Selling Price per chair= Sales Amount/No of chairs


Learn more about this topic:

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Accounting for Inventory Purchases

from Accounting 101: Financial Accounting

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