Reference no: EM132571789

Solve for the following examples (Show ALL OF your work; cut and copy the table into your answer or cut and copy into a word document and upload the document with your answers.

Question 1. An umbrella manufacturing company's yearly fixed costs are $275,000. The variable cost per unit is $5 and each umbrella is sold at $10.

· How many units does the firm sell per year in order to break even?

Question 2. Using the full-cost pricing method, calculate out the price for a box of chocolates when:

· fixed costs per month (rent, etc.) = $50,000

· variable costs (ingredients, etc.) = $3 per box

· sales volume per month = 100,000

· The accounts department has set 20% as the profit margin.

Question 3. A manufacturer has invested $120,000 in a new product and wants to set a price to earn a $80,000 profit. The variable cost per unit is $20 and the company sells the units at $100. How many units does the company need to sell to reach the target profit?

Question 4. An athletic mouth guard manufacturer has invested $500,000 in the business and wants to set a price to earn a 30 percent return on investment. The company thinks it can capture 1% of the United States' 18 million athletes at a variable unit cost of $2.50 per mouth guard. What would you price the mouth guard at? Would you go higher or lower than this? WHY?

Question 5. If the cost of a renovation job include permits ($500), supplies ($2000), subcontracted salaries/materials ($4000), and $500 in miscellaneous expenses (such as gas driving to/from job site). The contractor wants to make a 25% markup. What is the price of the job to the customer?