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

question 47

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 20% markup of life cycle cost, the price is:

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

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Definitions:

Automobile Dealership

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or sales subsidiary.

Land Improvements

Enhancements to a plot of land such as landscaping, fencing, and utilities, which increase the property's value.

Graded Land

Land that has been leveled or sloped to prepare it for construction, landscaping, or other specific purposes.

Title Fees

Fees associated with the transfer of ownership of property, such as legal costs or registration fees.