Problem:
Burtis Company produces a number of products. In 2002, the selling price of Product A, whose sales are normally 10,000 units per year, was calculated as follows:
Unit Costs
Direct Material Costs............................. $ 4.00
Direct labor costs.................................. 7.00
Overhead costs..................................... 4.80
Selling and administrative costs................. 3.50
Full Cost............................................. 19.30
Profit (10% of full cost)........................... 1.93
Selling price........................................ $21.23
In 2003, the company estimates that direct material cost and direct labor cost will increase by 12 percent. It also estimates that overhead cost will increase by a total of $6,000 and that selling and administrative cost and sales volume will remain unchanged.
What is the normal selling price for Product A in 2003?