Terra Potteryworks is a pricesetter that uses the costplus pricing approach for pricing its products. These products are unique, artistically designed architectural decorations. Terra produces and sells 6,200 units per year, which represent maximum capacity. Variable costs are $320.00 per unit. Total fixed costs are $920,000 per year. The CEO has a target of $40,000 in operating income, which he wants to achieve by yearend. Using the costplus pricing method, what sales price per unit should Terra use? (Round your answer to the nearest cent.)

A.

$154.84

per unit

B.

$326.45

per unit

C.

$468.39

per unit

D.

$474.84

per unit

2) Helmsman Products sells a special type of navigation equipment for $1,300. Variable costs are $800 per unit. When a special order arrived from a foreign contractor to buy 40 units at a reduced sales price of $1,000 per unit, there was a discussion among the managers. The controller said that as long as the special price was greater than the variable costs, the sale would contribute to the company's profits and should be accepted as offered. The vice president, however, decided to decline the order. Which of the following statements supports the decision of the vice president?

A.

The company will need to hire additional staff to execute this order.

B.The variable costs of

$800

includes variable costs of packing the product.

C.

The company is operating at 70% of its production capacity.

D.

The order is not likely to affect the regular sales.