La Femme Accessories Inc produces womens handbags The cost o

La Femme Accessories Inc. produces women\'s handbags. The cost of producing 1,160 handbags is as follows:

The selling and administrative expenses are $29,000. The management desires a profit equal to 17% of invested assets of $495,000.

If required, round your answers to nearest whole number.

a. Determine the amount of desired profit from the production and sale of 1,160 handbags.
$

b. Determine the product cost per unit for the production of 1,160 handbags.
$per unit

c. Determine the product cost markup percentage for handbags.
%

d. Determine the selling price of handbags. Round your answers to nearest whole value.

A machine with a book value of $252,000 has an estimated six-year life. A proposal is offered to sell the old machine for $215,500 and replace it with a new machine at a cost of $283,100. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,400 to $40,300.

a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter \"0\". Use a minus sign to indicate subtracted or negative numbers or a loss.

Solution

a. Desired profit = 17% x $495000 = $84150

b. Product cost per unit = Total manufacturing cost/Number of units = $27700/1160 = $24

Under the product cost concept, only the manufacturing costs will be included in the product cost per unit.

c. Product cost markup percentage = (Desired profit + Selling and administrative costs)/Total product cost = ($84150 + $29000)/27700 = $113150/$27700 = 408%

d.

*Markup = 408% x $24 = $98

Per Chegg guidelines, please post independent questions separately. Thank you.