DT Company uses cost-plus pricing and has $30 per unit in variable costs and $800,000 per year in fixed costs.Demand is estimated to be 200,000 units annually.What is the price if a markup of 30% on total cost is used to determine the price?
A)$34.00
B)$39.00
C)$44.20
D)$43.00

Question

Quizplus · Accepted Answer

First, let's calculate the total cost per unit:
Total Cost = Variable Cost + (Fixed Cost ÷ Units Produced)
Total Cost = $30 + ($800,000 ÷ 200,000)
Total Cost = $34 per unit

Next, let's apply the 30% markup on total cost:
Price = Total Cost × (1 + Markup Percentage)
Price = $34 × (1 + 0.30)
Price = $44.20 per unit

Therefore, the best choice is C, as it is the only option that matches the calculated price with the 30% markup.

DT Company Uses Cost-Plus Pricing and Has $30 Per Unit