Spellman Productions applies cost-based pricing to its range of products. A new product, the SP 162, is due to start production and the directors have met to determine a selling price for it.
The new product’s cost card includes the following details for each unit of SP 162:
| € |
Direct materials | 12.70 |
Direct labour | 10.50 |
Direct expenses | 2.00 |
Production overhead (absorbed using direct labour hours) | 13.90 |
TOTAL COST | 39.10 |
The directors use variable cost based pricing, applying a standard mark-up of 36%.
What is the selling price of each SP 162 unit (to the nearest cent)?