Pinkin Incorporated 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 Costs per Unit Fixed Costs (total) Direct materials $ 15 Overhead $ 85,000Direct labor 40 General and administrative 65,000Overhead 20 General and administrative 50 Using the total cost method what price should Pinkin charge?Multiple Choice$161.25$162.50$156.10$142.50$130.10
Question
Pinkin Incorporated 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 Costs per Unit Fixed Costs (total) Direct materials 85,000Direct labor 40 General and administrative 65,000Overhead 20 General and administrative 50 Using the total cost method what price should Pinkin charge?Multiple Choice162.50142.50$130.10
Solution
To determine the price Pinkin should charge, we first need to calculate the total cost per unit and then add the desired markup.
Step 1: Calculate the total variable cost per unit This is the sum of the direct materials, direct labor, overhead, and general and administrative costs per unit.
40 (Direct labor) + 50 (General and administrative) = $125 per unit
Step 2: Calculate the total fixed costs This is the sum of the overhead and general and administrative costs.
65,000 (General and administrative) = $150,000
Step 3: Calculate the fixed cost per unit This is the total fixed costs divided by the number of units expected to be sold.
5 per unit
Step 4: Calculate the total cost per unit This is the sum of the total variable cost per unit and the fixed cost per unit.
5 (Fixed cost per unit) = $130 per unit
Step 5: Calculate the price Pinkin should charge This is the total cost per unit plus the desired markup. The markup is 25% of the total cost per unit.
130 (Markup) = $162.50
So, Pinkin should charge 162.50.
Similar Questions
Galla Incorporated needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product. Galla expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials $ 8 Overhead $ 45,000Direct labor 9 General and administrative 18,000Overhead 7 General and administrative 13 Using the total cost method what price should Galla charge?
A phone company has a texting plan that charges a monthly rate based on the number of texts an individual sends per month. This is modeled by the function cost of plan, 𝐶(𝑥),𝐶(𝑥), in dollars, is a function of the number of texts sent, 𝑥𝑥, per month.𝐶(𝑥)=⎧⎩⎨⎪⎪250.05𝑥+25.075𝑥+25 if 𝑥<100 if 100≤𝑥≤500 if 500<𝑥𝐶(𝑥)={25 if 𝑥<1000.05𝑥+25 if 100≤𝑥≤500.075𝑥+25 if 500<𝑥If you sent 500500 texts last month, what was the cost of your bill from the phone company? Question 2Answera.$37.50$37.50 b.$50.00$50.00c.$25.00$25.00d.$62.50
There is a business that sells mobile phones. The business charges customers $700 for a new phone and $300 for a used phone. Assuming the business has sold 2 new phones and 1 used phone, how much total money (revenue) was generated?Choose 1 answer:$1,700$1,300$700$300
The owner of the cell phone shop charges 23% more than the cost price. If a customer paid 7011 for a cell phone, find the cost price of the cell phone.
A shopkeeper sells a phone X on 20% profit. What is the Cost Price of phone X?Statement A. Average of all the phones sold by shopkeeper is 225.Statement B. Selling Price of Phone X is Rs. 14400.a.if both statements A and B are neededb.if either of statement A or statement B alone is sufficient.c.if statement B alone is sufficient but statement A alone is not sufficientd.if both of them together are not sufficiente.if statement A alone is sufficient but B alone is not sufficient
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.