3 . Tynex, Inc., a manufacturing company produces 80,000 units of product A at a
ID: 2634736 • Letter: 3
Question
3.
Tynex, Inc., a manufacturing company produces 80,000 units of product A at a total cost of $2.4 million. Total fixed costs are $1.4 million. If the company increases production by 25% and uses a 19% markup, the price per unit will be:
A)
$51.80
B)
$37.10
C)
$30.80
D)
$31.54
3.
Tynex, Inc., a manufacturing company produces 80,000 units of product A at a total cost of $2.4 million. Total fixed costs are $1.4 million. If the company increases production by 25% and uses a 19% markup, the price per unit will be:
A)
$51.80
B)
$37.10
C)
$30.80
D)
$31.54
Explanation / Answer
Total variable cost = $(2.4-1.4) million
=$1 million
Variable costper unit = 1000000/80000
=$12.50
New level of production = 1.25*80000
100000 units
New cost per unit =((12.50*100000)+1400000)/100000
=$26.50
NewPrice = 1.19*26.50
=$31.54
Hence,option (D) is the correct answer
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