Garden Corporation Uses Cost-Plus Pricing with a 30% Mark-Up

question 106

Multiple Choice

Garden Corporation uses cost-plus pricing with a 30% mark-up.The company is currently selling 12,000 units at $21.45 per unit.Each unit has a variable cost of $11.50.In addition, the company incurs $60,000 in fixed costs annually.If demand falls to 10,000 units, how much will the company have to charge per unit in order to earn the same annual profit?

• A)$22.45
• B)$21.45
• C)$23.44
• D)$22.75

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Definitions:

Union

An organization of workers formed to protect and advance their rights and interests; also refers to the act of uniting or the state of being united.

Income Tax

A tax imposed by the government directly on individuals' or entities' income.

Lincoln

The 16th President of the United States, Abraham Lincoln, who led the nation during the Civil War and is known for issuing the Emancipation Proclamation.