Your boss is so impressed with your answers to the previous questions, he assigns you an…

Your boss is so impressed with your answers to the previous questions, he assigns you an additional task of calculating the selling price for a new product. The company expects that a $20,000 profit goal is reasonable for this product if they are able to sell 16,776 units. What is the appropriate selling price for this new product? Remember that you can calculate the contribution by adding fixed costs to the profit goal and then dividing by the total quantity sold. Once you calculate the contribution per unit, you will need to add that value to the variable costs per unit. Use the following information to determine your answer.

Each worker you hire can only handle 1,864 units of product per year. The storage and truck costs must be paid on each of the 18,000 units your boss expects to be sold.

Item

Cost

Product Wholesale Price

$148/unit

Storage Depreciation

$5,310

Storage Cost

$12.50/unit

Truck Cost

$7.00/unit

Truck Depreciation

$8,750

Labor

$30,000 per worker

Manager’s Salary

$12,500

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