Moon Company Uses the Variable Cost Concept of Applying the Cost-Plus

Moon Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows:
Variable costs: $\begin{array}{ll}\text { Direct materials } & \$ 7.00 \\\text { Direct labor } & 3.50 \\\text { Factory overhead } & 1.50 \\\text { Selling and admini strative expenses } & 3.00 \\\text { Total }&\$15.00\\\text { Fixed costs: }\\\text { Factory overhead } & \$ 45,000 \\\text { Selling and administrative expenses } & 20,000\end{array}$ Moon desires a profit equal to an18% rate of return on invested assets of $1,440,000.
a) Determine the amount of desired profit from the production and sale of Product T.
b) Determine the total variable costs for the production and sale of 75,000 units of Product T.
c) Determine the markup percentage for Product T.
d) Determine the unit selling price of Product T.
Round your markup percentage to one decimal place and other intermediate calculations and final answer to two decimal places.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free