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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.)
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