Question
Nelson Products is a price-setter that uses the cost-plus pricing approach. The products are specialty vacuum tubes used in sound equipment. The CEO is certain
Nelson Products is a price-setter that uses the cost-plus pricing approach. The products are specialty vacuum tubes used in sound equipment. The CEO is certain that the company can produce and sell 300,000 units per year, due to the high demand for the product. Variable costs are $2.30 per unit. Total fixed costs are $980,000 per year. The CEO will receive stock options if $300,000 of operating income for the year is reported. What sales price would allow the CEO to achieve the target if the cost-plus pricing method is used? (Round your answer to the nearest cent.)
a | $6.57 per unit |
b | $2.30 per unit |
c | $4.27 per unit |
d | $4.57 per unit |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started