Question - Leo Luken Corporation produces automatic cat feeders. The total cost per unit of producing a feeder is $42 as detailed below:
Direct Materials: $12.50
Direct Labor: $16.00
Variable Manufacturing Overhead: $8.20
Fixed Manufacturing Overhead: $5.30
Leo Luken Corporation is one of many companies that produce automatic cat feeders. Competition is very fierce. Other cat feeders are available on the market at a selling price of $45. Is Leo Lion Corporation a Price Taker or Price Setter? The company's desired income is 15% of the selling price. What is the cost at which Leo must produce the feeder in order to achieve its desired income?