Brandon Company prices its products using a 40% markup on total manufacturing cost to cover selling and administrative expenses and to provide a reasonable return on investment.

Cost per Unit

Direct materials$34

Direct labor20

Variable manufacturing overhead27

Variable selling and administrative expenses10

Fixed manufacturing overhead totals $150,000 per year. Fixed selling and administrative expenses are $100,000 per year. The average number of units sold per year is 5,000.

Using these data and the functional cost approach to pricing products, estimate the NORMAL SELLING PRICE. Note: The markup will end up being 40% of the selling price.

• $135
• $165
• $175
• $155
• $185