The procurement manager from a large merchandising firm has called your vice president for production to get a price quote for an additional 250 unitsof a given product. The vice president has asked you toprepare a cost estimate. The number of hours requiredto produce a unit is 4. The average labor rate is $16per hour. The materials cost $22 per unit. Overheadfor an additional 250 units is estimated at 40% of thedirect labor cost. If the company wants to have a 25%profit margin, what should be the total price to quote?

The procurement manager from a large merchandising firm has called your vice president for production to get a price quote for an additional 250 unitsof a given product. The vice president has asked you toprepare a cost estimate. The number of hours requiredto produce a unit is 4. The average labor rate is $16per hour. The materials cost $22 per unit. Overheadfor an additional 250 units is estimated at 40% of thedirect labor cost. If the company wants to have a 25%profit margin, what should be the total price to quote?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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