Question

The following data pertain to Frontier Enterprises:

Variable manufacturing cost $ 70
Variable selling and administrative cost 20
Applied fixed manufacturing cost 40
Allocated fixed selling and administrative cost 15
What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 110%?
A. $84.
B. $147
C. $210.
D. $231
E. Some other amount.

Answer 1

D. $231.

Step-by-step explanation:

With regards to the above, first we need to compute the total manufacturing cost.

Total manufacturing cost = Variable manufacturing cost + Applied fixed manufacturing cost

= $70 + $40

= $110

Then,

= $110 + ($110 × 1.1)

= $110 + $121

= $231

Therefore , the company will charge $231 if cost- plus pricing based is used.