Unformatted text preview: sell 20,000 pumps annually and marks up cost by 30%. Using Cost-Plus Pricing, what price should the company charge for the Model XL hairdryer? (Section 8.3) A3: $2,000,000 fixed costs / 20,000 pumps = $100 fixed costs per unit $100 fixed cost per unit + $500 variable cost per unit = $600 total cost per unit $600 x 1.30 = $780 = price that should be charged Q4: True or False. It is commonly accepted that 80% of a product’s costs cannot be reduced once it is designed. (Section 8.4) A4: True. Q5: Zap It Company determines it can sell 100,000 microwaves at a price of $500 per unit. If Zap It wants to gain a profit of $300 from each microwave, what is the target cost per unit? A5: $500 - $300 = $200 target cost per unit...
View Full Document
- Summer '08
- Managerial Accounting, Model XL hairdryer, Zap It Company