Blue Lights Co.uses the total cost concept of applying the cost-plus approach to product pricing.The costs of producing and selling 5,000 units are as follows: $\begin{array}{lr}
\text {Fixed factory overhead cost }&\$60,000\
\text {Fixed selling and administrative costs }&120,000\
\text { Variable direct materials cost per unit}&80\
\text {Variable direct labor cost per unit }&150\
\text {Variable factory overhead cost per unit }&50\
\text {Variable selling and administrative cost per unit }&30\
\end{array}$
? If the total cost markup percentage per unit is 5.5%, determine the selling price per unit of the company's product.
A) $346
B) $692
C) $365
D) $677

Question

Blue Lights Co.uses the total cost concept of applying the cost-plus approach to product pricing.The costs of producing and selling 5,000 units are as follows: $\begin{array}{lr}
\text {Fixed factory overhead cost }&\$60,000\
\text {Fixed selling and administrative costs }&120,000\
\text { Variable direct materials cost per unit}&80\
\text {Variable direct labor cost per unit }&150\
\text {Variable factory overhead cost per unit }&50\
\text {Variable selling and administrative cost per unit }&30\
\end{array}$
 ? If the total cost markup percentage per unit is 5.5%, determine the selling price per unit of the company's product.
A) $346
B) $692
C) $365
D) $677

Quizplus · Accepted Answer

First, calculate the total variable cost per unit: $80 (materials) + $150 (labor) + $50 (factory overhead) + $30 (selling and administrative) = $310. Then, calculate the total fixed cost: $60,000 (factory overhead) + $120,000 (selling and administrative) = $180,000. The total cost for 5,000 units is the sum of total variable costs ($310 * 5,000 = $1,550,000) and total fixed costs ($180,000), which equals $1,730,000. The cost per unit is $1,730,000 / 5,000 = $346. To find the selling price per unit with a 5.5% markup, multiply the cost per unit by 1.055: $346 * 1.055 = $365.

Blue Lights Co ? If the Total Cost Markup Percentage Per Unit Is