How much should they sell each product for

Reference no: EM133612005

Question: The Clean & Messy Company (CMC) has only two products - a Clean product and a Messy product. The Clean product has $100 in material costs and they pay their workers $75 per product. The Messy product has $25 in material costs and they pay their workers $75 per product. To run its facilities, CMC expects to incur $1,000,000 in fixed Manufacture Overhead. CMC expects to sell 1,000 Clean products and 3,000 Messy products. If CMC decides to allocate its fixed Manufacturing Overhead costs based on units produced, and if CMC wants to have a Gross margin of 40%, how much should they sell each product for? At the end of the period, CMC found that it sold 1,250 Clean products and 3,300 Messy products - should it expect its Gross Margin to be the expected 40%, less than 40% or greater than 40% - explain your answer.

Reference no: EM133612005

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