Net Sales for the Year Were $300,000 and Cost of Goods

question 37

Essay

Net sales for the year were $300,000 and cost of goods sold was $174,000 for the company's existing products.A new product is presently under development and has an expected selling price of not more than $55 per unit in order to remain competitive with similar products in the marketplace.
Required:
(a.)Calculate gross profit and the gross profit ratio for the year.
(b.)What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the company's gross profit ratio?

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Definitions:

Adaptive Advantage

A genetic trait that improves the survival or reproductive success of an organism in its environment.

Retaliate

To respond to an action or injury with a similar action, typically for revenge or defense.

Hominins

Members of the human lineage after the split from our common ancestor with chimpanzees, including all species of Homo and related genera.

New World Monkeys

A group of primates that live in the forests of Central and South America, distinct from their Old World counterparts in Africa and Asia.