Working Notes:

Justification- The minimum price for bid should be the price that ends up with no profit no loss. The bidder can sell the product at minimum price OF 11.98 and still cover the direct costs incurred. Indirect costs can be covered in the other product ranges since we can't trace the indirect costs to a particular product. 1. The minimum Selling Price for Washable Trousers will be 11.98. The ideal price will be the price which earns the firm a profit margin of 23%. 2. The minimum Selling Price for Cargo Pants is 12.27

Calculations

1.) Factory overhead costs will be 80 % of the total overhead costs. Rent-80%of 56400= 45120 Utilities- 80 % of 15600=12480 Maintenance= 2000 2.) Administration overhead costs will be 20 % of total overhead costs 3.) Direct material cost

Fabric cost - price per metre of fabric used*length of fabric used for one unit. Washable trousers= 3.1*1.5=4.65

Cargos= 1.7*2.9=4.93 T-shirt=1.07 Boxers=1.12*0.95=1.06 Coveralls=2.7*3=8.1 4.) Cost of zippers, elastic and dye directly given 5.) Calculate of costs of sewer Washable trousers: 35 pairs can be made in 8 hours 1hr= 35/8 pairs= 4.37 pairs $15 is the salary 4.37 pairs For 1 pair salary will be 15/4.37=3.43 Similarly well calculate for others. 6.)Calculation of cost of Knitters for T-shirts Knitters can knit 4250m of fabric in 8 hrs 1hr= 531.2 m of fabric 1T-shirt= 1.1m 531.2m of fabric can produce 531.3*1.1 t-shirts =584.3 tshirts $20 for 584.3 T-shirts=0.034 Similarly we can calculate for others. 7.)Calculation of factory and admin over head costs per unit Washable trousers: Time taken for one unit=8/35=0.2285 For 22840= 28450*0.2285=6502.8 Total time (including sewing hours)=6502.8+15840=22342

Factory overhead cost per hour will be= 59600/22342=2.66 Factory overhead cost per unit will be=2.66*0.228=0.606 Similarly we can calculate for cargos Admin overhead cost = 94800/22342=4.24*0.22=0.96 Similarly we can calculate for cargos. Full cost= indirect cost+ direct cost