Reference no: EM132871968

Question -

a) Swayze Small Engine Repair charges $45 per hour of labour. It has a material loading percentage of 40%. On a recent job to replace the engine of a riding lawn mower, Swayze worked 11 hours and used parts with a cost of $660. Calculate Swayze's total bill.

b) Clear Water is considering introducing a water filtration device for its one-litre water bottles. Market research indicates that 1,000,000 units can be sold if the price is no more than $5. If Clear Water decides to produce the filters, it will need to invest $2,200,000 in new production equipment. Clear Water requires a minimum rate of return of 15% on all investments. Determine the target cost per unit for the filter.

c) Floor Show Corporation produces area rugs. The following per-unit cost information is available: direct materials $20, direct labour $10, variable manufacturing overhead $6, fixed manufacturing overhead $7, variable selling and administrative expenses $3, and fixed selling and administrative expenses $8. Using a 35% markup on total per-unit cost, calculate the target selling price.