Moon Company Uses the Variable Cost Concept of Applying the Cost-Plus

question 145

Essay

Moon Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows:
Variable costs: $\begin{array}{ll}\text { Direct materials } & \$ 7.00 \\\text { Direct labor } & 3.50 \\\text { Factory overhead } & 1.50 \\\text { Selling and admini strative expenses } & 3.00 \\\text { Total }&\$15.00\\\text { Fixed costs: }\\\text { Factory overhead } & \$ 45,000 \\\text { Selling and administrative expenses } & 20,000\end{array}$ Moon desires a profit equal to an18% rate of return on invested assets of $1,440,000.
a) Determine the amount of desired profit from the production and sale of Product T.
b) Determine the total variable costs for the production and sale of 75,000 units of Product T.
c) Determine the markup percentage for Product T.
d) Determine the unit selling price of Product T.
Round your markup percentage to one decimal place and other intermediate calculations and final answer to two decimal places.

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Definitions:

Close the Sale

The final step in the sales process where the salesperson successfully secures a commitment from the buyer to make a purchase.

Excessive Absenteeism

A pattern of frequent and unjustified absences from work or responsibilities, which can negatively impact operations and productivity.

Unsafe Conduct

Actions or behaviors that pose a risk to health, safety, or well-being.