Fake Fur Company manufactures ecologically friendly fabric. Its primary customers are retailers. The estimated cost to make a meter of fabric is: Direct materials - $1.50 Direct labor $0.70 Variable overhead - $2.05 Fixed overhead - $3.50 Total = $7.75 Variable selling costs per unit - $2.00 Fixed administration charges - $12,500 If Fake Fur Company prices its product using a markup of 150% of its variable production costs, what would the unit selling price be?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
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Fake Fur Company manufactures ecologically friendly fabric. Its primary
customers are retailers. The estimated cost to make a meter of fabric is:
Direct materials - $1.50
Direct labor $0.70
Variable overhead - $2.05
Fixed overhead - $3.50
Total = $7.75
Variable selling costs per unit - $2.00
Fixed administration charges - $12,500
If Fake Fur Company prices its product using a markup of 150% of its
variable production costs, what would the unit selling price be?
Transcribed Image Text:Fake Fur Company manufactures ecologically friendly fabric. Its primary customers are retailers. The estimated cost to make a meter of fabric is: Direct materials - $1.50 Direct labor $0.70 Variable overhead - $2.05 Fixed overhead - $3.50 Total = $7.75 Variable selling costs per unit - $2.00 Fixed administration charges - $12,500 If Fake Fur Company prices its product using a markup of 150% of its variable production costs, what would the unit selling price be?
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