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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

Bayou Snack Company Manufactures Gourmet Dips Along with Potato Chips