Ragtown Grill uses cost-plus pricing with a 40% mark-up.The company is currently selling 20,000 units annually, but has a capacity of 30,000 units.Each unit has a variable cost of $15.In addition, the company incurs $60,000 in fixed costs annually.For how much is the company selling each unit?
A)$25.20
B)$21.00
C)$24.00
D)$23.80

Question

Quizplus · Accepted Answer

Cost per unit = $15 + ($60,000 / 20,000) = $21Selling price = $21 * 1.4 = $29.40

Ragtown Grill Uses Cost-Plus Pricing with a 40% Mark-Up