A firm's contract calls for it to receive 15 percent of total costs as a profit (using the cost-plus pricing technique). If total costs are $300,000 and the firm sells 10,000 units, its price is
A) $23.00.
B) $30.00.
C) $34.50.
D) $45.00.

Question

Quizplus · Accepted Answer

The firm's total cost is $300,000, and it receives 15% of this as profit, which is $45,000 ($300,000 * 0.15). Therefore, the total price is the sum of the total cost and profit, which is $345,000 ($300,000 + $45,000). Dividing this by the number of units (10,000) gives a price per unit of $34.50 ($345,000 / 10,000).

A Firm's Contract Calls for It to Receive 15 Percent