D Question 8 4 pts Merrick Candle Co. has estimated a production level of 460,00

Question

D Question 8 4 pts Merrick Candle Co. has estimated a production level of 460,000 candles this winter season. Merrick estimates they will incur $2.50 of variable product cost per candle and $230,000 of total fixed overhead cost. Variable selling and administrative costs are expected to be $0.90 per unit, and fixed selling and administrative costs are expected to reach $130,000 total. If Merrick plans to apply an 85% markup on the candles, what would the selling price per unit be using the absorption costing approach to cost-plus pricing? $5.55 $3.40 $6.29 $3.56

Explanation / Answer

8) Calculate selling price :

So answer is a) $5.55

7) Variable overhead efficiency variance for the same quarter is unfavorable

So answer is a) The company's variable overhead efficiency variance was unfavorable

Variable production cost per unit 2.50 Fixed production cost per unit (230000/460000) 0.50 Total production cost per unit 3.00 Markup (3*85%) 2.55 Selling price per unit 5.55

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