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Business, 16.04.2020 20:39 KA115

[3 points total] One of your company’s most important customers has called to ask for an additional 2125 units of particular product your company produces. You have been tasked with preparing the cost estimate for this additional production. Your preliminary data collection has revealed that it will take 2.66 hours to produce each additional unit. Each unit will also require a total of $11.45 in materials. Your company’s overhead rate is known to be 56% of direct labor costs and your labor rate is $17.75 per hour. a) [1.5 points] What is the unit price that you should quote for this production? Assume that your company wants a 35% profit margin on this order. b) [1.5 points] If you were to quote a prices of $97.30 per unit, and all other costs remain the same, what percent of profit would your company receive on this order? Assume that profit is again related to direct labor costs.

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