# A company has \$50 per unit in variable costs and \$1,200,000 per year

1. A company has \$50 per unit in variable costs and \$1,200,000 per year in fixed costs. Demand is estimated to be 110,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?

2. Tory Company sells a single product. Troy estimates demand and costs at various activity levels as follows:

Units Sold Price Total Variable Costs Fixed Costs

120,000 \$48 \$3,000,000 \$1,000,000

147,500 \$45 \$3,500,000 \$1,000,000

160,000 \$40 \$4,000,000 \$1,000,000

180,000 \$35 \$4,500,000 \$1,000,000

200,000 \$30 \$5,000,000 \$1,000,000

How much profit will Troy have if a price of \$45 is charged?

3. 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?

4. PowerDrive, Inc. produces a hard disk drive that sells for \$175 per unit. The cost of producing 25,000 drives in the prior year was:

Direct material \$625,000

Direct labor 375,000