The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: $$\begin{array} { l r }
\text { Variable manufacturing cost } & \$ 180 \
\text { Applied fixed manufacturing cost } & 90 \
\text { Variable selling and administrative cost } & 60 \
\text { Allocated fixed selling and administrative cost } & 75
\end{array}$$ What price will the company charge if the firm uses cost-plus pricing based on total cost and a markup percentage of 40%?
A) $462.
B) $513.
C) $567.
D) $594.
E) None of the other answers are correct.

Question

The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: $$\begin{array} { l r } 
\text { Variable manufacturing cost } & \$ 180 \
\text { Applied fixed manufacturing cost } & 90 \
\text { Variable selling and administrative cost } & 60 \
\text { Allocated fixed selling and administrative cost } & 75
\end{array}$$ What price will the company charge if the firm uses cost-plus pricing based on total cost and a markup percentage of 40%?
A) $462.
B) $513.
C) $567.
D) $594.
E) None of the other answers are correct.

Quizplus · Accepted Answer

The total cost per unit is $180 (variable manufacturing) + $90 (fixed manufacturing) + $60 (variable selling and administrative) + $75 (fixed selling and administrative) = $405. With a 40% markup, the price is $405 + (0.40 * $405) = $567.

The Razooks Company, Which Manufactures Office Equipment, Is Ready to Introduce