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Accounting

Problem:

The Dynamics Company uses cost-plus pricing with a 50% mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $6. In addition, the company incurs $200,000 in fixed costs annually.

Required:

If demand falls to 80,000 units and the company wants to continue to earn a 50% return, what price should the company charge?

A) $13.50

B) $14.55

C) $12.75

D) $10.95

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167227

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