Bill Needles Makes and Sells Customized Silver Belt Buckles for $225

question 134

Multiple Choice

Bill Needles makes and sells customized silver belt buckles for $225 each.He has determined that his fixed costs are $8,000,and his average variable costs per buckle are $145.
-Refer to Bill Needles.What is his fixed cost contribution per buckle?

• A)$45
• B)$80
• C)$88.89
• D)$170

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Definitions:

Cost-Plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost.

Absorption Costs

Absorption Costs involve all the costs associated with manufacturing a product, including direct labor, materials, and overhead, allocated to the product.

Mark-Up Percentage

Mark-up percentage is the ratio of profit added to the cost price to determine the selling price.

Cost-Plus Pricing

A pricing method where the seller establishes the sale price by adding a defined markup to the cost per unit of the product.