Alexon Limited is considering producing a new line of high q

Alexon Limited is considering producing a new line of high quality snowboards. The company will incur $57 in variable product costs for each snowboard produced. Fixed manufacturing overhead costs amount to $160,000.

Do not enter dollar signs or commas in the input boxes.
Round your answer to 2 decimal places.

a) Assume that the company has a policy to set product prices equal to the variable cost plus 79%. Determine how much the company would sell each snowboard for.

Selling Price: $Answer

b) Assume that the company has a pricing policy that requires their products to be sold at full cost plus 60%. For the upcoming year, it believes it can produce and sell a total of 6,600 snowboards. Determine how much the company would sell each snowboard for.

Full Cost per Unit: $Answer
Selling Price: $Answer

Solution

a)

selling price is 79% more than variable cost.

variable cost= 57$ per snowboard

selling price= (57+79% of 57)$= 1.79*57$=102.03 $

b)full cost= fixed cost+ variable cost

full cost= 160,000+57*6600=536,200

full cost per unit= 536,200/6600=81.24

selling price is more than 60% to the full cost.

selling price= 1.6*81.24=129.98$