Asked by Shelby Wilcox on Apr 28, 2024
Verified
Falcon Inc. manufactures Product B, incurring variable costs of $15.00 per unit and fixed costs of $70,000. Falcon desires a profit equal to a 12% return on invested assets, $785,000 of assets are devoted to producing Product B, and 100,000 units are expected to be produced and sold.
a.Compute the markup percentage, using the total cost method of applying the cost-plus approach to product pricing.
b.Compute the selling price of Product B.Round your intermediate computations and final answer to two decimal places.
Markup Percentage
The ratio between the cost of a good or service and its selling price, expressed as a percentage over the cost.
Total Cost Method
A method of inventory valuation where the total cost of goods available for sale is allocated to the cost of goods sold and ending inventory.
Invested Assets
Assets that are purchased or acquired for the purpose of generating income or appreciation, including stocks, bonds, real estate, and more.
- Utilize the total cost approach within cost-plus pricing to ascertain the prices of products.
- Determine objectives for profit based on the return on invested assets and recognize its effect on pricing approaches.
- Master and employ the markup percentage notion within the framework of cost-plus pricing.
Verified Answer
MG
Learning Objectives
- Utilize the total cost approach within cost-plus pricing to ascertain the prices of products.
- Determine objectives for profit based on the return on invested assets and recognize its effect on pricing approaches.
- Master and employ the markup percentage notion within the framework of cost-plus pricing.