Jay Company uses the total cost concept of applying the cost - plus approach to

Question

Jay Company uses the total cost concept of applying the cost - plus approach to product pricing. The costs and expenses of producing and selling 38,400 units of Product E are as follows: Jay desires a profit equal to a 14% rate of return on Invested assets of S640,000. Determine the amount of desired profit from the production and sale of Product E. Determine the total costs and the cost amount per unit for the production and sale of 38,400 units of Product E. Round Cost amount per unit to two decimal places. Determine the markup percentage for Product E. Round your answer to one decimal place. Determine the selling price of Product E. Round your answer to two decimal places.

Explanation / Answer

A
Desired Profit = 640,000 * 14% = $89,600

B
Total Cost = Fixed Costs + Variable Costs
= (80,000 + 14,000) + 11.70*38,400
= $543,280

Cost per unit = 543,280 / 38,400 = $141.48

C
Mark-up Percentage = Desired Profit / Total Cost
= 89,600 / 543,280
= 16.49%

D
Selling Price = Cost per unit * (1 + Mark-up Percentage)
= 141.48*(1+16.49%)
= $164.81

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.