Question

sosa company has $39 per unit in variable costs and $1,900,000 per year in fixed costs. demand is estimated to be 138,000 units annually. what is the price if a markup of 35% on total cost is used to determine the price? round to two decimal places.

Answer 1

Managerial accounting is used to give relevant information to people within a company, mostly management, to aid them in making more informed business decisions. Financial accounting is used to generate financial statements that benefit external users.

Annual fixed cost is $1,900,000.

Producing 138,000 units annually

Fixed cost per unit is $13.77 divided by 1,900,000 units.

$39 is the variable cost per unit.

Fixed cost per unit plus variable cost per unit equals total cost per unit ($13.77 + $39 = $52.77 per unit).

Markup equals Total Cost * 35% (52.77 * 35% = $18.47),

Sale price equals total costs plus a markup of 52.77 plus 18.47, or $71.24.

Any expenses that vary according to how much a business produces and sells are considered variable costs. Contrarily, fixed costs are those outlays that don't change regardless of how much a business produces.

To know more about variable costs, click here:-

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