The Budgeting Department of Vester Manufacturing Corporation prepared the following schedule of factory overhead at various levels of production.

The company manufactures gaskets for natural gas pipelines. In recent months, legislation unfavorable to gas transmission firms has been pending in the legislature, and customer orders have been minimal. For example, in December only 150,000 gaskets were manufactured, representing 60% of capacity. At that level of production, direct materials and direct labor cost $150,000 and $112,500, respectively. Economic indicators point to higher future production costs, so management is considering stepping up January production to 100% of capacity (an additional 100,000 units) to build up inventory while costs are low.
Required:
(1) Determine the cost of the additional 100,000 units of product.
(2) Compute the total cost of producing 250,000 units in January.
(3) Determine the sales price required for January production to achieve a 20% markup on production cost.

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40% of Capacity Capacity Capacity Capacity 100,000 60% of 80% of 200,000 115,000 100% of Units of product Variable factory overhead$50,000 Fixed factory overhead 150,000 250,000 75,000 $100,000 $125,000 100,000 90,000 125,000