Magpie Corporation Uses the Total Cost Method of Product Pricing

question 43

Multiple Choice

Magpie Corporation uses the total cost method of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% return on invested assets of $700,000.​ ​
-The dollar amount of desired profit from the production and sale of Magpie's product is

• A)$175,000
• B)$67,200
• C)$73,500
• D)$96,000

Analyze the effect of specific business transactions on a company's financial statements.

Calculate total assets, liabilities, and owner's equity using the accounting equation.

Determine the effects of buying and selling assets on a company's financial position.

Assess the profitability of a company through the analysis of income, expenses, and net income.

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Definitions:

Product Q19S

A designated name or code for a specific product, suggesting a unique item or version offered by a company.

Machine-Hours

A measure of production activity that indicates the amount of time machines are used in the manufacturing process.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a basis for allocating labor costs to products.

Activity-Based Costing

A method in cost accounting that assigns costs to products and services based on the activities involved in their production or delivery.