Exe---7

Last Year
Sale price per unit
- Gross profit (25% of C.G.S)280*25/125
Per unit cost

=
=

280
(56)
224

Working for per unit cost 224

Direct material is 40%= 224*40/100= 89.6
Direct labor is 45% = 224*45/100 = 100.8
FoH 15%
= 224*15/100= 33.6
Per unit cost
224
Gross profit=2000 units *56=112000
Coming Year
Material
+ Increase25 %( 989.6*25/100)

89.6
22.4

112

Direct labor
+ increase 25 %( 100.8*25/100)

100.8
25.2

126

FOH
33.6
+ increase 12.5% (33.6*12.5/100) 4.2
Per unit cost

37.8
275.8

Number of units sold to realized gross profit 112000

Req (1) If new sale price is 300
- Per unit cost
(275.8)
Gross profit per unit
24.2
Total Gross profit = 112000 = 4628 units
Per unit gross profit 24.2
Req (2) If new sale price is 325
- Per unit cost
(275.8)
Gross profit per unit
49.3

= Total Gross profit = 112000 = 2276 units

Per unit gross profit 49.2

Req (3) If new sale price is 350

- Per unit cost
(275.8)
Gross profit per unit
74.2
= Total Gross profit = 112000 = 1509 units
Per unit gross profit 74.2