Question

Magpie Corporation uses the total cost method 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% return on invested assets of $700,000. Fixed factory overhead cost $38,700 Fixed selling and administrative costs 7,500 Variable direct materials cost per unit 4.60 Variable direct labor cost per unit 1.88 Variable factory overhead cost per unit 1.13 Variable selling and administrative cost per unit 4.50 The dollar amount of desired profit from the production and sale of Magpie's product is

Answer 1

The desired profit for Magpie Corporation, with a 25% return on invested assets of $700,000, is $175,000.

Step-by-step explanation:

To calculate the desired profit for Magpie Corporation with a 25% return on invested assets of $700,000, we multiply the investment amount by the desired return percentage:

1. Invested assets: $700,000
2. Desired return: 25%
3. Desired profit calculation: $700,000 * 25% = $175,000

The dollar amount of desired profit from the production and sale of Magpie's product is $175,000.