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Dory Inc. competes with Guppy Inc. in the distribution of mechanical pencils. Dory also identifies its primary activities and cost pools as ordering, receiving and
Dory Inc. competes with Guppy Inc. in the distribution of mechanical pencils. Dory also identifies its primary activities and cost pools as ordering, receiving and storage, and shipping. It reports the following details for 2020: For 2020, Dory buys 250,000 pencil packs at an average cost of $4.75 per pack. Dory plans to use cost-plus pricing. Calculate the prospective selling price (1) if Dory marks up the purchase costs of the pencil packs by 20% and (2) if Dory marks up the full cost of the pencil packs by 6%. The following table shows the total costs for 250,000 packs and the cost per pack in 2020 using Dory Inc.'s activity-based costing system. The different cost bases and markup percentages give two prospective selling prices that are close to each other. The final selling price will be adjusted after taking into account customer and competitor reactions
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