Problem 3 Fox Co Fox Corp has been asked to quote a sales pr


Problem 3
Fox Co.

Fox Corp. has been asked to quote a sales price for additional units of its product.
These additional products are above its typical monthly production run of 5,000 units.
The relevant data to prepare the quote is as follows:

Additional Requested Units:	35
Labor hours to produce 1 unit:	0.79
Labor Cost per hour:		$79.98
Material Cost per unit:	$203.05
Other Manufacturing Expenses:	18%	of the direct labor expense
SG&A Expenses remain unchanged at:	$173,000
Required Net Margin:		9.3%

Compute the following:	(Input Answers Below)
a. COGS per unit?
b. Unit Gross Profit?
c. Gross Margin (%)?
d. Selling Price per unit?
e. Total Profit?
You must show work and intermediate steps for credit, using excel functions or formulas is the simplest way.


Problem 3
Fox Co.

Fox Corp. has been asked to quote a sales price for additional units of its product.
These additional products are above its typical monthly production run of 5,000 units.
The relevant data to prepare the quote is as follows:

Additional Requested Units:	35
Labor hours to produce 1 unit:	0.79
Labor Cost per hour:		$79.98
Material Cost per unit:	$203.05
Other Manufacturing Expenses:	18%	of the direct labor expense
SG&A Expenses remain unchanged at:	$173,000
Required Net Margin:		9.3%

Compute the following:	(Input Answers Below)
a. COGS per unit?
b. Unit Gross Profit?
c. Gross Margin (%)?
d. Selling Price per unit?
e. Total Profit?
You must show work and intermediate steps for credit, using excel functions or formulas is the simplest way.

Direct labor expense per unit = 1 x 0.79 x 79.98 = $ 63.18

Material cost per unit = $ 203.05

Other Manufacturing Expenses per unit = 0.18 x 63.18 = $ 11.37

COGS per unit = Direct labor expense per unit + Material cost per unit + Other Manufacturing Expenses per unit = 63.18 + 203.05 + 11.37 = $ 277.6

SG&A Expenses = $ 173,000

Selling Price per unit (when 5,000 units are produced) = 277.6 + (173,000 / 5,000) = $ 312.2

Sales for 35 units = 312.2 x 35 = $ 10,927.

COGS for 35 units = 277.6 x 35 = $ 9,716.

Gross Profit for 35 units = Sales for 35 units – COGS for 35 units = 10,927 – 9,716 = $ 1,211.

Unit Gross Profit = 1,211 / 35 = $ 34.6

Gross Margin (for 35 units) = Gross Profit for 35 units / Sales for 35 units = 1,211 / 10,927 = 0.1108 = 11.08 %.

d. Selling Price per unit = 277.6 + (173,000 / 5,000) = $ 312.2

Total sales = Selling Price per unit x Total number of units sold = 312.2 x 5,035 = $ 1,571,927.

Total cost = COGS per unit x Total number of units produced = 277.6 x 5,035 = $ 1,397,716.

Total profit = Total sales – Total cost = 1,571,927 – 1,397,716 = $ 174,211.