Question

The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable...

The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model:

Variable manufacturing costs $ 270
Applied fixed manufacturing overhead 135
Variable selling and administrative costs 90
Applied fixed selling and administrative costs 105

What price will the company charge if the firm uses cost-plus pricing based on absorption cost and a markup percentage of 110%?

Multiple Choice

  • $660.

  • $1,260.

  • $445.50.

  • None of these answer choices is correct.

  • $850.50

Business   Accounting   
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Homework Answers

Answer #1

Total cost per unit = Variable manufacturing costs + Applied fixed manufacturing overhead + Variable selling and administrative costs + Applied fixed selling and administrative costs

= 270 + 135 + 90 + 105

= $600

Mark up = 110%

= 600 x 110%

= $660

Price to be charge = Total cost per unit + Mark up

= 600 + 660

= $1,260

Second option is the correct option.

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