Lethal Industries Has Recently Patented a New Product Called MaxiDrive,an

question 80

Essay

Lethal Industries has recently patented a new product called MaxiDrive,an automobile oil for maximum engine performance.The following annual information was developed by the company's controller for use in price determination:
$\begin{array}{lr}\text { Variable production costs } & \$ 1,860,000 \\\text { Fixed overhead } & 620,000 \\\text { Selling expenses } & 420,000 \\\text { General and administrative expenses } & 230,000 \\\text { Desired profit } & 342,000\end{array}$
Annual demand for the product is expected to be 500,000 quarts.Round answers to nearest two decimal places.
a. Compute the projected unit cost for one quart of MaxiDrive.
b. Prepare the formulas for computing the markup percentage and the selling price for one quart using the gross margin pricing method.

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Definitions:

Bankruptcy Relief

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Debt that has been formally released or forgiven, relieving the debtor of any further responsibility to repay it.

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