1.

Clausen Books Inc. would like to determine a price for a new textbook. Clausen projects that it will sell 30,000 textbooks. Clausen wants a 25% markup on the total cost of the textbook. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 33	Overhead	$ 85,000
Direct labor	58	General and administrative	65,000
Overhead	38
General and administrative	68

If Clausen uses the total cost method, what price should they charge for the textbook?

	A.	$220.10
	B.	$246.10
	C.	$251.25
	D.	$252.50
	E.	$232.50

2.

Aragon Manufacturing needs to calculate a markup for a new product. Aragon anticipates it will sell 15,000 units and desires a target profit of $52 per unit. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 23	Overhead	$ 52,000
Direct labor	24	General and administrative	59,000
Overhead	17
General and administrative	26

Using the variable cost method, what markup percentage to variable cost should be used?

	A.	65%
	B.	61%
	C.	77%
	D.	66%
	E.	56%

3.

Last year's results of operations for Skylar Corporation are shown below:

Contribution margin income statement	Per Unit	Annual Total
Sales (17,700 units)	$ 12.00	$ 212,400
Variable costs
Direct materials	1.50	26,550
Direct labor	4.00	70,800
Overhead	1.00	17,700
Contribution margin	5.50	97,350
Fixed costs
Fixed overhead	1.00	17,700
Fixed selling and administrative expenses	1.40	24,780
Income	$ 3.10	$ 54,870

A merchandising company offers to buy 5,900 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 administrative expense for special processing costs. Skylar's annual production capacity is 27,700 units. If Skylar accepts this additional business, the special order will yield a:

	A.	$4,425 profit.
	B.	$5,900 profit.
	C.	$9,825 loss.
	D.	$3,925 loss.
	E.	$2,450 loss.