Question

Pinkin Inc. needs to determine a price for a new phone model. Pinkin desires a 20% markup on the total cost of the phone. Pinkin expects to sell 34,000 phones. Additional information is as follows: Variable product cost per unit $ 77 Variable administrative cost per unit 55 Total fixed overhead 89,000 Total fixed administrative 81,000 Using the total cost method what price should Pinkin charge

Answer 1

Answer: $‭164.4‬0

Step-by-step explanation:

Pricing using the total cost method is;

= Fixed cost per unit + Variable cost per unit + Markup

Fixed cost per unit = (Fixed overhead + Fixed admin) / Units to be sold

= (89,000 + 81,000) / 34,000

= $5 per unit

Variable cost per unit = 77 + 55 = $132

Markup = 20% * (Fixed cost per unit + Variable cost per unit)

= 20% * ( 5 + 132)

= $27.40

Total cost price = 5 + 132 + 27.40

= $‭164.4‬0