Ideal Company Ideal Company produces and sells a single product.Information on its costs follow:
$\begin{array}{ll}
\text{Variable costs:}\
~~\text { SG\&A } & \$ 2 \text { per unit } \
~~\text { Production } & \$ 4 \text { per unit } \
\text { Fixed costs: } & \
~~\text { SG\&A } & \$ 12,000 \text { per year }\
~~\text { Production } & \$ 15,000 \text { per year }
\end{array}$ Refer to Ideal Company.Assume Ideal Company produced and sold 5,000 units.At this level of activity,it produced a profit of $18,000.What was Ideal Company's sales price per unit?
A)$15.00
B)$11.40
C)$9.60
D)$10.00

Question

Ideal Company Ideal Company produces and sells a single product.Information on its costs follow:
$\begin{array}{ll}
\text{Variable costs:}\
~~\text { SG\&A } & \$ 2 \text { per unit } \
~~\text { Production } & \$ 4 \text { per unit } \
\text { Fixed costs: } & \
~~\text { SG\&A } & \$ 12,000 \text { per year }\
~~\text { Production } & \$ 15,000 \text { per year } 
\end{array}$ Refer to Ideal Company.Assume Ideal Company produced and sold 5,000 units.At this level of activity,it produced a profit of $18,000.What was Ideal Company's sales price per unit?
A)$15.00
B)$11.40
C)$9.60
D)$10.00

Quizplus · Accepted Answer

To find the sales price per unit, calculate total costs and add profit, then divide by units sold: Total variable costs = (2 + 4) * 5000 = $30,000; Total fixed costs = 12,000 + 15,000 = $27,000; Total costs = $57,000; Total revenue = Total costs + Profit = $57,000 + $18,000 = $75,000; Sales price per unit = $75,000 / 5000 = $15.00.

Ideal Company Ideal Company Produces and Sells a Single Product