Nguyen,Inc

question 14

Multiple Choice

Nguyen,Inc.has received a bid for 15,000 units.The costing estimates show that the average cost per unit for this bid will be $500.The company uses cost-based pricing and adds 20% markup to total costs.What total price will Nguyen ask for the entire order?

• A)$9,000,000
• B)$7,500,000
• C)$1,500,000
• D)$6,000,000

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Definitions:

Markup

refers to the amount added to the cost price of goods to cover overhead and profit.

Machine-Hours

A measure of production volume based on the total hours machines are run in the manufacturing process, often used to allocate overhead costs.

Departmental Predetermined Rates

The estimated overhead rates calculated for specific departments within a company to allocate costs appropriately.

Manufacturing Overhead

All indirect factory-related costs incurred during the production process, excluding direct materials and direct labor.