Answer:
1. Variable cost per unit = $150
2. Markup percentage = 34.89%
3. Selling price = $202.33
Explanation:
Variable cost per unit = 70+40+25+15= $150
Fixed cost = 670,000+ 305,000 +285,000= $1,260,000
Fixed cost per unit = 1,260,000/30,000= $42
Profit per unit = <u>Targeted profit</u>
Targeted production unit
= <u>$310,000 </u> =$10.33
30,000
Markup percenge = <u>Fixed cost per unit + profit per unit</u>
Variable cost per unit
=<u>$42+ $10.33</u> = <u>52.33 </u>* <u>100</u> = 34.89%
$150 $150 1
Selling Price = Variable cost per unit + markup
= $150+$42+$10.33
= $202.33
Variable cost-plus pricing is calculated by determining variable costs per unit and adding mark-up which will cover fixed costs per unit and generate a targeted profit margin.
