Johnson Marine Has the Following Costs and Expected Sales for the Coming

question 13

Multiple Choice

Johnson Marine has the following costs and expected sales for the coming year. Johnson is considering a number of different methods to determine the price of its product. $\begin{array}{lr}&\text { Total Costs }\\\text { Variable Manufacturing } & \$ 2,350,000 \\\text { Variable Selling and Administrative } & 750,000 \\\text { Plant-level Fixed Overhead } & 1,200,000 \\\text { Fixed Selling and Administrative } & 600,000 \\\text { Batch-level Fixed Overhead } & 200,000 \\\text { Total Investment in Product Line } & 10,000,000 \\\text { Expected Sales (units) } & 20,000\end{array}$ If Johnson determines price using a 40% markup of full manufacturing cost, the price is:

• A) $262.50
• B) $306.00
• C) $375.00
• D) $364.29
• E) $330.00

---

Definitions:

Year-end Adjustment

Adjustments made to financial statements at the close of a fiscal year to account for all financial activities and ensure accuracy in reporting.

Market Value

The current price at which an asset or service can be bought or sold, determined by the supply and demand dynamics in the open market.

Common Stock

Shares of ownership in a corporation that entitle the shareholder to vote on corporate matters and receive dividends, subject to the company's profitability.

Short-term Speculation

The practice of buying and selling assets with the intention of making quick profits from short-term fluctuations in price.