Magic Fun Has Total Fixed Costs of $4,000,000 and Total

question 12

Multiple Choice

Magic Fun has total fixed costs of $4,000,000 and total variable cost of $2,000,000 during a month when it sold 200,000 units.What price will Magic Fun charge if it uses cost-plus pricing and a markup of 20%?

• A)$30.00
• B)$24.00
• C)$36.00
• D)$48.00

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Definitions:

Accounts Payable

The amount owed by a business to its suppliers or vendors for goods and services purchased on credit.

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when cash is exchanged.

Expenses

Costs incurred by a business or individual in the course of generating revenue, including operational costs and overheads.

Dividends Payable

A liability account on a company's balance sheet representing the amount of declared dividends that have not yet been paid out to shareholders.