Avocado Ltd Produces Small Electronic Components for Kitchen Appliances

Avocado Ltd produces small electronic components for kitchen appliances.This year it expects to produce 10 000 units of component X.The variable manufacturing cost of component X represents 50% of its total costs.The target profit is $2 per unit.Using the cost-plus pricing approach based on total costs,the selling price per unit of component X is $20.If Avocado Ltd decides to change its cost-plus pricing approach to base the mark up percentage on variable manufacturing costs,the selling price for each unit of component X will be:

A) $10
B) $20
C) $30
D) Not enough information.

Correct Answer:

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