Clipper Office Furniture Uses Cost-Plus Pricing with a 40% Mark-Up

question 40

Multiple Choice

Clipper Office Furniture uses cost-plus pricing with a 40% mark-up on total cost at capacity.The company is currently selling 40,000 units at $19.60 per unit.Each unit has a variable cost of $9.In addition, the company incurs $200,000 in fixed costs annually.If demand falls to 32,000 units and the company wants to continue to earn a 40% return, what price should the company charge?

• A)$15.25
• B)$21.35
• C)$19.60
• D)$6.10

---

Definitions:

Carbon Monoxide

A colorless, odorless, and toxic gas produced by incomplete combustion of carbon-containing materials.

First Alert

A notification system or warning that is given as soon as an issue or emergency is detected, often used in safety and security contexts.

Disaster

A sudden event, such as an accident or a natural catastrophe, that causes great damage or loss of life.

Fear Appeals

A marketing strategy that uses elements of fear to motivate the audience to take a particular action, such as buying a product or changing behavior.