Magpie Corporation Uses the Total Cost Concept of Product Pricing

question 44

Multiple Choice

Magpie Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $700,000. The cost per unit for the production and sale of the company's product is:

• A) $12.11
• B) $12.88
• C) $15
• D) $13.50

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Definitions:

Inventory

The basic substances, products under manufacturing, and completed items that form part of a company's assets, which are available or will soon be available for purchase.

Source of Cash

Any activity or operation within a business that generates cash, including operations, financing, and investing activities.

Accounts Receivable Period

The average number of days that it takes for a company to collect payments owed by its customers after a sale has been made.

Early Payment Discount

An incentive offered by a seller to a buyer for paying a bill before the due date.