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What price should the company charge

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Question 1: Clipper Office Furniture uses cost-plus pricing with a 40% mark-up on total cost at capacity. The company is currently selling 40,000 units at $19.60 per unit. Each unit has a variable cost of $9. In addition, the company incurs $200,000 in fixed costs annually. If demand falls to 32,000 units and the company wants to continue to earn a 40% return, what price should the company charge?

Option A) $21.35

Option B) $19.60

Option C) $15.25

Option D) $6.10

Reference no: EM132528730

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