Concordia University - COMM 305 Winslow Industries makes large waste storage bins and sells them for $150 each

Accounting Apr 09, 2021

Concordia University - COMM 305

Winslow Industries makes large waste storage bins and sells them for $150 each. The manufacturing cost of each bin is as follows:

Direct material $50

Direct labour $40

Manufacturing overhead $20

The manufacturing overhead is 80% variable and 20% fixed. The company receives an order for 1,000 bins which will cost an additional $10 in shipping costs per bin. The company has sufficient excess capacity to produce the order.

Calculate the minimum price that Winslow should charge for each bin.

Expert Solution

Answer: $116

Explanation:

Direct material $ 50

Direct labour	40
Manufacturing overhead ($20 x .8)	16
Shipping costs	10
Minimum selling price	$116

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