1. XYZ Company produces widgets. XYZ Company calculates the following costs for the production of 1...

1. XYZ Company produces widgets. XYZ Company calculates the following costs for the production of 1 widget.

Direct materials: $250

Direct labor: $400

Variable overhead: $125

Fixed overhead: $200

Variable selling: $50

Fixed selling: $35

Assuming that XYZ uses a 25% markup on the cost of producing 1 unit, calculate the sales price per unit charged by XYZ.

a. $812.50

b. $1,325

c. $848

d. $1,218.75

Expert Solution

The correct answer is Option 'd': $ 1,218.75

The calculation for above answer is given below:

Note that Selling expense are not included under 'cost of producing' the unit.

A	Direct Material	$ 250.00
B	Direct Labor	$ 400.00
C	Variable Overheads	$ 125.00
D	Fixed Overheads	$ 200.00
E = A+B+C+D	Total cost of producing 1 unit	$ 975.00
F = E x 25%	Markup 25%	$ 243.75
G = E + F	Sale Price	$ 1,218.75

ekkarill92 answered 2 years ago

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