Largo,Inc ,Which Uses a Volume-Based Cost System,produces Cat Condos,and Has

question 95

Multiple Choice

Largo,Inc. ,which uses a volume-based cost system,produces cat condos,and has a gross profit margin of 50%.Direct materials cost $15 per unit,and direct labor costs $10 per unit.Manufacturing overhead is applied at a rate of 200% of direct labor cost.Nonmanufacturing costs are $27 per unit.How much does each cat condo sell for?

• A)$50
• B)$72
• C)$90
• D)$144

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Definitions:

Depreciable Basis

The initial cost of an asset that can be depreciated over time for tax purposes, minus any salvage value.

Tax Savings

The reduction in income taxes that results from taking a permissible deduction from taxable income.

Cash Flow Streams

Multiple flows of cash, either inflowing or outflowing from different sources or activities, over a period.