PRICING DECISION PROBLEM 1 Barquilla, Inc., which manufactures various lines of computer equipment, is planning to introduce a new line of laptops. Current plans call for the production and sale of 1,000 units, with estimated production costs as follows: Variable costs: Direct Materials P200,000 Direct Labor 120,000 Manufacturing overhead 80,000 Selling and administrative 100.000 Total variable costs P 500,000 Fixed costs: Manufacturing overhead P300,000 Selling and administrative 100,000 Total fixed costs 400.000 Total costs P900.000 The average amount of capital invested in the laptop product line is P500,000 and Barquilla's target return on investment is 20%. 1. What unit price must Barquilla charge if the company uses cost-plus pricing based on total cost? P1,000 2. If Barquilla uses cost-plus pricing based on absorption cost, the markup percentage the company must use would be mu% 3. If Barquilla uses cost-plus pricing based on variable cost, the markup percentage the company must use would be mu% = 100% 4. What is the mark up percentage if the basis is variable production cost? mu% 5. What is the mark up percentage if the basis is full production cost? mu% 6. What is the mark up percentage if the basis is prime cost? mu%