A Company Expects to Produce and Sell a Single Product

question 21

Essay

A company expects to produce and sell a single product. Management desires a 14% return on assets of $725,000. The following additional company information is available: $\begin{array}{ll}\text { Variable costs (per unit) } & \\\text { Production costs } & \$ 58 \\\text { Nonproduction costs } & \$ 11\\\text { Fixed costs (in total) } & \\\text { Overhead } & \$ 179,872 \\\text { Nonproduction } & \$ 49,984\end{array}$
Required:
Compute selling price per unit given that markup percentage equals desired profit divided by total costs under the following independent assumptions.
(1) The company produced and sold 17,600 units
(2) The company produced and sold 28,732 units

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Definitions:

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activities into operating, investing, and financing activities.

Dividend Reinvestment Scheme

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and close to their maturity.

Basis of Measurement

The specific basis chosen to measure various types of assets, liabilities, income, and expenses, such as historical cost, fair value, and amortized cost.