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23 August, 22:39

Premium Company makes cardboard boxes. During the most recent accounting period Premium paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes. Premium Company started and completed 400,000 boxes. Premium desires to earn a gross margin that is equal to 40% of product cost. Based on this information the selling price per box is: a. $0.40 b. $0.56 c. $0.50 d. $0.70

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  1. 24 August, 01:40
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    The correct answer is B.

    Explanation:

    Giving the following information:

    Raw material = $60,000

    Direct labor = $48,000

    Overhead = $52,000

    Premium Company started and completed 400,000 boxes.

    First, we need to calculate the total manufacturing cost and unitary cost:

    Total cost = Direct material + direct labor + overhead

    Total cost = 60,000 + 48,000 + 52,000 = 160,000

    Unitary cost = 160,000/400,000 = $0.4 per box

    Now, we can calculate the selling price:

    Selling price = Unitary cost*mark up = 0.4*1.40 = $0.56
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Home » Business » Premium Company makes cardboard boxes. During the most recent accounting period Premium paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes.
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