less thall 3 remainder of the moI 5-42 Pricing to Maximize Contribution Reynolds Company produces and sells picture frames. O instant success in the market, but recently compe Reynolds has been charging $12.50 wholesale for thehavc ra last year to si fra s price. The unit variable cost of produc What is your opinion of this s. One parti cular fr ame for g e for the frames, and sales have manager in charge of will rebound to 10,000 u last year to 7,000 units this year. The product the price to $10 per frame. He believes sales w will fall to 6,000 units at the $12.50 The is $6, and $60,000 of fixed cost is assigned to the frames. nits ate is at the $12.50 price. The unit variable cost of I. Assuming that the only prices under consideration are $i0 and $12.50 per frame lead to the largest profit for Reynolds? Explain why. 2. What subjective considerations might affect your pricing decision? 5-43 Target Selling Prices Consider the following data from Blackmar Company's budgeted income of dollars): Target sales Variable costs Manufacturing Selling and administrative Total variable costs 30,000 6,000 Fixed costs Manufacturing Selling and administrative a ne 8,000 6,000 Total fixed costs Total of all costs Operating income 2. 40,000 Compute thefollwing markup percentages that would be useriab percentage of (1) total variable costs, (2) full costs, and (3) vaab ing markup percentages that would be used for obtaining the sds f anufacturing