Question

Delta Inc., is designing a new drone for aerial photography and is projected to have the following per unit cost to manufacture: Material Cost: $63, Labor Cost: $24, Overhead Cost:$110. Delta adds 30% to its manufacturing cost for corporate profit. rev i. What will be the overall cost for a batch of 10,000 drones

Answer 1

Answer
i) Computation of Overall Cost for a batch of 10,000 drones
Particulars	Amount ($)
Material Cost	$630,000
($ 63 x 10,000)
Labor Cost	$240,000
($ 24 x 10,000)
Overhead cost	$1,100,000
($110 x 10,000)
Total Cost	$1,970,000

ii) Computation of Profit	Units	Price per unit	Amount($)
Net Sales	9506	256	24,33,536
Less: Cost of goods sold	9506	199	18,91,694
(Cost per unit= 19,89,897 /10,000 = 199)
Profit	5,41,842

Working Notes:
a) Total cost for a batch (including scrapped 1% during manufacturing)
Particulars	Units	Cost per unit	Amount ($)
Finished products of a batch	10,000	197	19,70,000
Total cost for a batch (including scrapped 1% during manufacturing)	10,101	197	19,89,897
(10,000/99% = 10,101)
b) Computataion of Actual Finished goods units sold
Particulars	Units
Finished products in a batch	10,000
Less: Unsold Finished products (3%)	300
Finished products Sold	9,700
Less: Sales Return (2% of 9,700)	194
Net Sales units	9,506
c) Compuatation of Selling price per unit
Particulars	Amount($)
Cost per unit	197
Add: Corporate profit (30% on cost)	59
Selling price per unit	256