pixie industries has recently patented a new product called Stardust. the follow

Question

pixie industries has recently patented a new product called Stardust. the following annual information was developed by the company's controller for use in price determination.

Variable production costs: $930,000
Fixed overhead: $310,000
Selling expenses: $210,000
General and administrative expenses: $115,000
Desired profit: $171,000

annual demand for the product is expected to be 500,000 bottles. round answers to the nearest two decimal places.
A) compute the projected unit cost for one bottle of stardust. ________
B) prepare the formulas for computing the markup percentage and the selling price for one bottle using the gross margin pricing method.
Markup percentage: _______
selling price for one bottle. _______

Explanation / Answer

a unit cost of one bottle Variable production costs 930000 Selling expenses 210000 General and administrative expenses 115000 Fixed overhead 310000 total cost 1565000 no of units 500000 cost per unit 3.13 b Markup percentage (profit/sales) = (171000/(1565000+171000)) 9.85% selling price for one bottle (1565000+171000)/500000 3.472

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