Troto company has total fixed costs of 6000000 and total

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Reference no: EM13596370

1) Sylvia wants to order nine coffee mugs with writing that says "Better to remain silent and be thought a fool than to speak out and remove all doubt. - Abraham Lincoln." She contacts personalcreations.com to make the mugs. The mugs have the following standard unit cost:

Direct Material = $5.65
Direct Labor = $1.85
Variable Overhead = $3.00
Fixed Overhead = $8.00
Total = $18.50

Personalcreations.com has enough unused capacity to accept the special order without affecting regular sales. What is the minimum price that personalcreations.com should accept for the special order?
A) $18.50 per mug.
B) $10.50 per mug.
C) Personalcreations.com should turn down the order because it is not large enough.
D) $5.65 per mug.

2) Troto company has total fixed costs of $6,000,000 and total variable cost of $3,000,000 at a volume level of 300,000 units. What price would be charged if the company used cost plus pricing and a markup of 30%?
A) $30.00
B) $37.50
C) $39.00
D) $28.00

3) The price which maximizes the revenue is the price that should be selected get most economic benefit.
A) True
B) False

Reference no: EM13596370

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