Question

Camelot Company has estimated the following costs for this year for 50,000 units: Manufacturing Selling and Administrative Variable $100,000 $ 25,000 Fixed 150,000 75,000 Total $250,000 $100,000 What is the initial selling price needed to obtain a target profit of $50,000 using the manufacturing cost markup method

Answer 1

the initial selling price is $8 per unit

Step-by-step explanation:

The computation of the initial selling price is shown below;

Total manufacturing costs = $250,000

Now

Markup required is

= $100,000 + $50,000

= $150,000

So, the Initial selling price is

= ($250,000 + $150,000) ÷ 50,000

= $8.00

hence, the initial selling price is $8 per unit