A company has $30 per unit in variable costs and $1,200,000 per year in fixed costs....

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?

Expert Solution

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

jeff jeffy answered 3 years ago

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A company has $30 per unit in variable costs and $1,200,000 per year in fixed costs....

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