Question

Pinkin Inc. needs to determine a price for a new phone model. Pinkin desires a 25% markup on the total cost of the phone. Pinkin expects to sell 30,000 phones. Additional information is as follows: Variable product cost per unit$75 Variable administrative cost per unit 50 Total fixed overhead 85,000 Total fixed administrative 65,000 Using the total cost method what price should Pinkin charge

Answer 1

Answer:

See below

Explanation:

Total costs = Product costs + Administrative costs

= ($75 × 30,000) + $85,000 - ($50 × 30,000) + $65,000 = $3,900,000

Total cost per unit =Total cost / Units expected to be sold= $3,900,000 /30,000 = $130

Markup per unit = Total cost per unit × Markup percentage = $130.00 × 25% = $32.5