In: Finance
A company has $30 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 104,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?
Particulars |
Per unit |
Units |
Total |
Variable cost…….. A |
30.00 |
104000 |
3,120,000 |
Fixed cost………….. B |
- |
1,200,000 |
|
Total cost (A+B) |
4,320,000 |
||
Add: Margin @40% on Total cost |
1,728,000 |
||
Sales (Total cost + Margin) |
58.15 |
104000 |
6,048,000 |
Variable cost = 104000 units x $30 = $3,120,000
Fixed cost = 1,200,000 (given)
Total cost = $4,320,000
Margin = 4320000 x 40% = $1,728,000
-----
Sales = Total cost + Margin = $4,320,000 + $1,728,000 = $6,048,000
----
Sales price = Sales / Total units = $6,048,000 / 104000 = $58.15 per unit