Question

Variable $100,000 $ 25,000 Fixed 150,000 75,000 Total $250,000 $100,000 What is the initial selling price needed to obtain a target profit of $50,000 using the manufacturing cost markup method

Answer 1

Answer: $8.00

Explanation:

Details missing in question are:

These costs are for 50,000 units.

$250,000 is manufacturing cost. $100,000 is administrative cost.

The total manufacturing cost is shown to be $250,000 above.

A profit of $50,000 is needed in addition to this cost as well as the administrative cost of $100,000.

Total revenue expected is therefore:

= 250,000 + 100,000 + 50,000

= $400,000

50,000 units are to be sold so to make a revenue of $400,000, each unit should be sold for:

= 400,000 / 50,000

= $8.00