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Homework answers / question archive / The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0
The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.25 above full cost. Management estimates that the variable cost of the globe will be $60 per unit and fixed costs per year will be $240,000.
Assuming sales of 1,200 units, what is the full selling price of a globe with a 0.25 markup?
Round to two decimal places.
Computation of Selling Price of a Globe with a 0.25 markup:
Selling Price = (Total Cost + Mark up )/Number of Units
Here,
Total Cost = Variable Cost + Fixed Cost = (1,200 units*$60) + $240,000 = $72,000+$240,000 = $312,000
Mark up = $312,000*0.25 = $78,000
Number of Units = 1,200
Selling Price = ( $312,000 + $78,000) /1,200
= $390,000/1,200
Selling Price = $325
