Final answer:
To find the selling price for Onondaga Electronics's printer cables, calculate the base cost by dividing the net profit (markup minus overhead) by the net profit rate, and then add the markup to the base cost. The final selling price comes out to be $32.15.
Step-by-step explanation:
The problem states that Onondaga Electronics operates with a net-profit rate of 20% on its printer cables. The markup, which is the amount added to the cost to determine the selling price, is $8.95, and the overhead, which is the indirect cost associated with production, is $4.31. To find the selling price, we need to consider both the markup and the overhead.
Calculating the Cost Before Markup
First, we must determine the base cost before the markup. This is the cost at which the company breaks even before it applies its desired net-profit rate:
Markup = Net Profit + Overhead
Since we have the markup and the overhead, we can solve for the Net Profit:
Net Profit = Markup - Overhead
Net Profit = $8.95 - $4.31 = $4.64
Calculating the Selling Price
Now, since the net-profit rate is 20%, we can express this rate as a decimal for calculation by dividing by 100:
Net Profit Rate = 20% = 0.20
So, the base cost can be found by dividing the net profit by the net-profit rate:
Base Cost = Net Profit / Net Profit Rate
Base Cost = $4.64 / 0.20 = $23.20
The selling price is then determined by adding the markup to the base cost:
Selling Price = Base Cost + Markup
Selling Price = $23.20 + $8.95 = $32.15