Question

QUESTION 42 Magic Fun has total fixed costs of $4,000,000 and total variable cost of $2,000,000 during a month when it sold 200,000 units. What price will Magic Fun charge if it uses cost-plus pricing and a markup of 20%? $30.00 $24.00 $36.00 $48.00 QUESTION 43 Cain Manufacturing produces 40,000 clocks at a total cost of $900,000. Total fixed costs are $400,000. If Cain increases production by 20% and uses a 50% markup, how much will the selling price per unit be? $49.35 $21.00 $31.50 $34.05 QUESTION 44 A manufacturing company produces and sells 50,000 units of a single product. Total product costs are $8 per unit. If total sales are $550,000, what markup percentage is the company using?

Answer 1

42.

Total fixed costs = $4,000,000

Total variable costs= $2,000,000

Sales units = 200,000

Mark up = 20%

Total costs = Total fixed costs + Total variable costs

= 4,000,000+2,000,000

= $6,000,000

Mark up = 20%

= 6,000,000 x 20%

= $1,200,000

Sales revenue = Total costs + Mark up

= 6,000,000+1,200,000

= $7,200,000

Selling price per unit = Sales revenue/Number of units

= 7,200,000/200,000

= $36

Third option is correct option.

43.

Number of units produced = 40,000

Total cost = $908,000

Total fixed cost = $408,000

Total variable cost = Total cost - Total fixed cost

= 908,000-408,000

= $500,000

Variable cost per unit = Total variable cost/ Number of units

= 500,000/40,000

= $12.5

Increase in production = 20%

= 40,000 x 20%

= 8,000

number of units produced after increase in production = 40,000+8,000

= 48,000

Fixed cost per unit = total fixed cost/Number of units

= 408,000/48,000

= $8.5

Total cost per unit = Variable cost per unit +Fixed cost per unit

= 12.5+8.5

= $21

Mark up = 50%

= 21 x 50%

= $10.50

Selling price per unit = Total cost per unit + Mark up

= 21 + 10.50

= $31.50

Third option is correct option.

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