Business, 20.03.2020 11:21, rubensanchez625

Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 55,000 parts in the coming year. While the demand for Williams’s part has been growing in the past 2 years, management is not only aware of the cyclical nature of the automobile industry, but also concerned about market share and profits during the industry’s current downturn.

Total Costs 4,664,000
Variable manufacturing 839,650
Variable selling and administrative 2,329,875
Plant-level fixed overhead 659,495
Fixed selling and administrative 344,000
Batch-level fixed overhead Total investment in product line 22,334,000
Expected sales (units) 58,000

Determine the price for the part using a markup of 41% of full manufacturing cost.

Answers: 2

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Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions....