A Company Expects to Produce and Sell a Single Product

question 29

Essay

A company expects to produce and sell a single product. Management desires a 13% return on assets of $2,100,000. The following additional company information is available: $\begin{array}{lr}\text { Variable costs (per unit) } & \\\text { Production costs } & \$ 62 \\\text { Nonproduction costs } & \$ 8 \\\text { Fixed costs (in total) } & \\\text { Overhead } & \$ 521,280 \\\text { Nonproduction } & \$ 397,824\end{array}$
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 19,200 units
(2) The company produced and sold 114,888 units

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Definitions:

Surpluses

The quantity of goods that remains when a producer has more goods than it is able to sell at the current price.

Shortages

Occurrences when the demand for a product or service exceeds its supply in a market, often leading to higher prices and unmet consumer needs.

Equilibrium Price

The market price at which the quantity of a good supplied equals the quantity demanded, leading to a stable market situation.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and more.