A company has $6.70per unit in variable costs and $3.00 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.54, what price should be changed if 57,000 units are expected to be sold?
Round to two decimal places
Answer - Expected sale price per unit = $14.37
Explaination -
Step 1 - find the fixed cost per unit on expected units by dividing total fixed cost by number of units expected to sold
Total fixed cost = fixed cost per unit * 50000 units
Total fixed cost = $3 * 50000 units = $150000
So, fixed cost per units on expected sale units = $150000/57000 units = 2.63158
Step 2 - Add variable cost per unit to the fixed cost on expected unit to find total cost
Total cost = fixed cost per unit + variable cost per unit
Total cost = $2.63158 + $6.7 = $9.33158
Step 3 - Multiply the total cost by 1 + markup percentage to find sale price per unit
Sale price per unit = $9.33158 * ( 1 + 0.54 )
Sale price per unit = $9.33158 * 1.54
Sale price per unit = $14.37 ( rounded off to 2 decimals)
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