1.)

Pinkin Incorporated needs to determine a price for a new phone model. Pinkin desires a 25% markup on the total cost of the phone. Pinkin expects to sell 30,000 phones. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 34	Overhead	$ 85,000
Direct labor	59	General and administrative	65,000
Overhead	39
General and administrative	69

Using the total cost method what price should Pinkin charge?

Multiple Choice

• $251.10

• $257.50

• $225.10

• $237.50

• $256.25

2.)

Pauley Company needs to determine a markup for a new product. Pauley expects to sell 15,000 units and wants a target profit of $30 per unit. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 12	Overhead	$ 37,150
Direct labor	13	General and administrative	44,150
Overhead	6
General and administrative	15

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

Multiple Choice

• 67%

• 72%

• 88%

• 77%

• 76%

3.)

Lattimer Company had the following results of operations for the past year:

Contribution margin income statement	Per Unit	Annual Total
Sales (20,700 units)	$ 12.00	$ 248,400
Variable costs
Direct materials	1.50	31,050
Direct labor	4.00	82,800
Overhead	1.00	20,700
Contribution margin	5.50	113,850
Fixed costs
Fixed overhead	1.00	20,700
Fixed selling and administrative expenses	1.40	28,980
Income	$ 3.10	$ 64,170

A foreign company offers to buy 6,900 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 selling expense for export fees. Lattimers annual production capacity is 30,700 units. If Lattimer accepts this additional business, the special order will yield a:

Multiple Choice

• $2,950 loss.

• $11,575 loss.

• $5,175 profit.

• $4,675 loss.

• $6,900 profit.