We manufacture breakfast cereal at our factory in Toad Suck, AR. Our current selling price is $2.40 per box, F.O.B. our shipping dock (our customers pay shipping expenses). Our gross profit margin is 40%. We pay our workers $10.25 per hour. Currently, the labor portion of our cost per box of cereal is $.215 (twenty one and one half cents). Beginning January 1, 2021, the minimum hourly wage will increase to $12.00.
A. Calculate the labor cost per box of cereal after Jan I, 2021. Round answer to 3 places.
B. After Jan 1, 2021, what will be our total cost per box of cereal, assuming all other non-labor costs remain the same? Round answer to 3 places.
C. If we are to make a 40% gross profit margin, what must our new selling price be, after Jan 1, 2021? Round answer up to closest penny.
D. Based upon annual sales of 6 million boxes, how much added labor costs will we experience per year when comparing 2021 to 2020?
