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War Room Company manufactures fire extinguisher per the design and specification of its customers, and accordingly uses a job order cost system.  In March 2015, it finished 50,000 pieces for a customer at a cost of P1,500 per unit for direct materials and P1,000 per unit for conversion costs.   The production incurred 500 defective units due to an error in the specification made by the customer and had to be reworked at a cost of P200 per unit. No allowance for rework is included in the budgeted overhead. If War Room wants to maintain a 30% gross profit rate, how much is the selling price per unit?

War Room Company manufactures fire extinguisher per the design and specification of its customers, and accordingly uses a job order cost system.  In March 2015, it finished 50,000 pieces for a customer at a cost of P1,500 per unit for direct materials and P1,000 per unit for conversion costs.   The production incurred 500 defective units due to an error in the specification made by the customer and had to be reworked at a cost of P200 per unit. No allowance for rework is included in the budgeted overhead. If War Room wants to maintain a 30% gross profit rate, how much is the selling price per unit?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...
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6. War Room Company manufactures fire extinguisher per the design and specification of its customers, and accordingly uses a job order cost system.  In March 2015, it finished 50,000 pieces for a customer at a cost of P1,500 per unit for direct materials and P1,000 per unit for conversion costs.   The production incurred 500 defective units due to an error in the specification made by the customer and had to be reworked at a cost of P200 per unit. No allowance for rework is included in the budgeted overhead.

If War Room wants to maintain a 30% gross profit rate, how much is the selling price per unit?

 

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