What price should charge per unit of the component

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Reference no: EM132540453

Sage Company uses an activity-based costing system. Consider the following information:

Manufacturing Activity Cost Driver Used Cost per Unit of ConversionAreaas Application Base Application BaseMachine setup

Number of setups $165

Material handling

Number of parts $16

Milling

Machine hours $47

Assembly

Direct labour hours $27

During the past month, 55 units of a component were produced. 3 setups were required. Each unit needs 33 parts, 5 direct labour hours, and 7 machine hours. Direct materials cost $132 per finished unit. All other costs are classified as conversion costs.

Question 1: If the company would like its gross margin to be 34% of sales, what price should it charge per unit of the component? (Round entry to whole amount, e.g. 5,725.)

Reference no: EM132540453

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