In order to sell a product at a profit the product must be priced higher than th
ID: 3007639 • Letter: I
Question
In order to sell a product at a profit the product must be priced higher than the total of what it costs you to build the unit, plus period expenses, and plus overhead. At the end of last year the broad cost leader Chester had an Elite product Clack. Use the Inquirer's Production Analysis to find Clack's production cost, (labor+materials). Exclude possible inventory carrying costs. Assume period expenses and overhead total 1/2 of their production cost. What is the minimum price the product could have been sold for to cover the unit cost, period expenses, and overhead. The production cost is $21.45. Options: $35 b. $32 c)$21.45
Explanation / Answer
min price = production cost + period cost +overhead (1/2 of production cost)
= > 21.45 +10.725
=>32.175
therefore if giong by option we would choose a for profit