Setting Selling Prices: Contribution Approach The company prices its products using a 40% markup on total variable cost to cover fixed costs and to provide a reasonable return on investment. Using the following data and the contribution approach to pricing products, estimate the normal selling price. Note: The markup will end up being 40% of the selling price.

Fixed manufacturing overhead totals $80,000 per year. Fixed selling and administrative expenses are $55,000 per year. The average number of units sold per year is 5,000.

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Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Cost per Unit $10 17 13 8