A Company Uses Cost-Plus Pricing and Has a Total Cost

question 115

Multiple Choice

A company uses cost-plus pricing and has a total cost of $40.00 per unit at a volume of 120,000 units.The variable cost per unit is $25.00.What will the price be if the company expects a volume of 110,000 units and uses a markup of 50%?

• A)$41.36
• B)$62.05
• C)$37.50
• D)$60.00

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Definitions:

Average Cost

The total cost divided by the quantity produced, indicating the cost per unit of output.

Competitive Industry

An industry characterized by a large number of firms competing against each other, leading to innovation, varied product choices, and reasonable prices for consumers.

Marginal Cost

The cost associated with producing one more unit of a product, reflecting how production costs change with output levels.

Average Cost

The total cost of production divided by the number of units produced, often used to calculate the cost per unit.