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

Question

13.Magpie Corporation uses the total cost concept of product pricing. Below is the cost information for the production and sale of 61,300 units of its sole product. Magpie desires a profit equal to a 23% rate of return on invested assets of $627,000.

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

Fixed factory overhead cost $37,300 Fixed selling and administrative costs 7,800 Variable direct materials cost per unit 4.88 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

Desired profit = 6,27,000*23% = 1,44,210

Computation of Desired Sale:-

Total Cost = 61,300*(4.88+1.88+1.13+4.50) + 37,300 + 7,800 = 8,04,607

Desired Sale = 1,44,210 + 8,04,607 = 9,48,817

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