The Chief Financial Officer and Marketing Director of CHI International are discussing three approaches to pricing their products, namely cost based, customer based , competitor based. The company budgets to make 25,000 units per year which has a variable cost of production of $55 per unit. Fixed production costs are $650,000.00 per annum. The Chief Financial Officer has recommended the cost based approach and stated that if the selling price is to be 40% higher than the full cost the company will maximize its profit.

Determine the selling price of the product using the full cost plus method and discuss which of the pricing approaches discussed is most likely to maximize profits for CHI International.