Dotterel Corporation uses the variable cost concept of product pricing. Below is

Question

Dotterel Corporation uses the variable cost concept of product pricing. Below is cost information for the production and sale of 35,000 units of its sole product. Dotterel desires a profit equal to a 11.2% rate of return on invested assets of $350,000.

$105,000

35,000

4.34

5.18

.98

.70

The dollar amount of desired profit from the production and sale of the company's product is:

Fixed factory overhead cost

$105,000

Fixed selling and administrative costs

35,000

Variable direct materials cost per unit

4.34

Variable direct labor cost per unit

5.18

Variable factory overhead cost per unit

.98

Variable selling and administrative cost per unit

.70

Explanation / Answer

Required return (desired Profit) = 350000*11.2% = 39200

Assuming that all the 35000 units are sold, the return per unit will be = 39200/35000 = 1.12

Total variable cost per unit = 11.2

(Sale price per unit * 35000) - (35000*11.2) - (105000+35000) = 39200

Sales price per unit * 35000 = 39200 + 532000

Sales Price per unit = 16.32

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.