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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 becovered 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

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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 forothers.

6.)Calculation of cost of Knitters for T-shirts

Knitters can knit 4250m of fabric in 8 hrs1hr= 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

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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