Magpie Corporation uses the total cost concept of product pricing. Below is the

Question

Magpie Corporation uses the total cost concept of product pricing. Below is the cost information for the production and sale of 63,800 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $575,000.

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

$143,750

$575,000

$115,000

$287,500

Fixed factory overhead cost $37,800 Fixed selling and administrative costs 7,500 Variable direct materials cost per unit 4.77 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

Explanation / Answer

The dollar amount of desired profit =(575000*25%)= 143750 Option 1 is correct

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