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Bayou Snack Company Manufactures Gourmet Dips Along with Potato Chips

Question 133

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Bayou Snack Company manufactures gourmet dips along with potato chips flavored with Cajun spices.The market price for similar chips is $7.The management of the company desires a 30% net profit margin.
The current costing data relating to this product are as follows.
 Direct materials $1.00 Direct labor 1.50 Manufacturing overhead 2.75 Nonmanufacturing costs 0.75\begin{array}{ll}\text { Direct materials } & \$ 1.00 \\\text { Direct labor } & 1.50 \\\text { Manufacturing overhead } & 2.75 \\\text { Nonmanufacturing costs } & 0.75\end{array} Requirement:
Determine if Bayou's current full-product costs meet its target cost.

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The target cost is $4.90,and t...

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