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Lethal Industries has recently patented a new product called MaxiDrive, an. automobile oil for maximum engine performance. The following annual information was developed by the
Lethal Industries has recently patented a new product called MaxiDrive, an. automobile oil for maximum engine performance. The following annual information was developed by the company's controller for use in price determination: Total Costs Unit Costs Total variable production cost 180,000 18 Fixed overhead 60,000 6.2 Total production costs 240,000 24 4 Selling general, and administrative expenses Selling expenses General expenses Total selling, general, and administrative expenses Total cost and expenses 2 40,000 20,000 60,000 300,000 6 30 The desired profit for the period is 300,000 and the annual demand for the product is expected to be 10,000 quarts. Round answers to nearest two decimal places. a. Prepare the formulas for computing the selling price for one quart using the gross margin pricing method. (3 Points) b. Computing the selling price for one quart using the return on assets pricing method, if the company uses assets totaling $800,000 in producing the quarts and expects a 20% return on those assets. (3 Points)
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