Reference no: EM132193294

Questions -

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?

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.

3. A manufacturer has invested $120,000 in a new product and wants to set a price to earn an $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?

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?

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?