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Sladkaya [172]
3 years ago
10

Delish Foods sells jars of special spices used in Italian cooking. The variable cost is $2 per unit. Fixed costs are $9,000,000

per year. It has $42,000,000 of average assets, and the desired profit is a 5% return on assets. Delish Foods sells 5,000,000 units per year. The company uses cost-plus pricing because it is the only company that produces this kind of product. Using cost-plus pricing methodology, determine the sales price per unit. (Round your answer to the nearest cent.) Select one: O A. $3.80 B. $2.40 O C. $2.00 D. $4.22
Business
1 answer:
Ymorist [56]3 years ago
8 0

Answer:

$3.38 per unit

Explanation:

Total costs:

= Total fixed cost + Total variable cost

= $9,000,000 + (5,000,000 units × $2 per unit)

= $9,000,000 + $10,000,000

= $19,000,000

Target revenue:

= Total costs - Desired profit

= $19,000,000 - ($42,000,000 × 5%)

= $19,000,000 - $2,100,000

= $16,900,000

Sales price per unit = Target revenue ÷ Total units

                                = $16,900,000 ÷ 5,000,000

                                = $3.38 per unit

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