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Dexter, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and
Dexter, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and sale of 1,000 units, with estimated costs as follows:
Variable costs: | ||
Manufacturing | $462,000 | |
Selling and administrative | 112,000 | |
Total variable costs | $574,000 | |
Fixed costs: | ||
Manufacturing | $312,000 | |
Selling and administrative | 192,000 | |
Total fixed costs | 504,000 | |
Total costs | $1,078,000 | |
The average amount of capital invested in the laptop product line is $880,000 and Dexter's target return on investment is 15%.
What price must Dexter charge if the company uses cost-plus pricing based on total cost?
$946.
$880.
$1,000.
$1,210.
None of these.
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