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Your boss has asked you to determine what price the company should charge for the manufacture of one row moldboard plow.
Assume each plow produced requires 4 units of material and 3 hours of direct labor. The average purchase price of the raw material is $10 per unit and the current wage rate is $3.50 per hour. In addition, a variable cost of $2 is associated with each direct labor hour. Finally, the firm employs 300,000 direct labor hours and incurs $400,000 of fixed overhead. Given a markup of 30 percent, compute the price charged for each moldboard plow using the absorption cost method.
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