WDY currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a kaizen costing system. WDY's current product cost (direct costs and manufacturing overhead) per unit is

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Quizplus · Accepted Answer

The profit margin is 30%, so the cost is 70% of the selling price. $85 * 70% = $59.50. Cost of goods sold is 40% of the total cost, so the product cost is 60% of $59.50, which is $35.70.

WDY Currently Sells Its Primary Product for $85 Per Unit