Question
I have a scenario that I'm supposed to calculate the price, using cost plus pricing, given the cost and profit information below. From my understanding
I have a scenario that I'm supposed to calculate the price, using cost plus pricing, given the cost and profit information below. From my understanding units are needed to do the calculation, but none are provided and $1,800,000 seems to be a rather large amount for fixed cost per unit, so I'm assuming it's per year. Can anyone explain how to come up with the price using cost plus pricing?
Packer Stoves Inc. is designing a commercial style stove for residential use. The team developing the specifications, cost, and pricing decisions includesproduction,accounting,engineeringandmarketing.
The stove includes a warming drawer, broiler unit, and high BTU burner. With these special features, Packer Stoves Inc. believes it can sell the stoves for $4,700. Packer Stoves Inc. desires to earn a 25% profit on each stove. Variable costs are $2,900 per stove and fixed costs are $1,800,000.
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