Bayou Snack Company Manufactures Gourmet Dips Along with Potato Chips

Essay

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.
$$\begin{array} { l l } \text { Direct materials } & \$ 1.00 \\\text { Direct labor } & 1.50 \\\text { Manufacturing overhead } & 2.75 \\\text { Nonmanufarturing costs } & 0.75\end{array}$$ Requirement:
Determine if Bayou's current full-product costs meet its target cost.