Sutton Products is a price - setter that uses the cost - plus pricing approach. The products are specialty vacuum tubes used insound equipment. The CEO is certain that the company can produce and sell 320,000 units per year, due to the high demand forthe product. Variable costs are $2.40 per unit. Total fixed costs are $970,000 per year. The CEO will receive stock options if$100,000 of operating income for the year is reported. What sales price would allow the CEO to achieve the target if thecost-plus pricing method is used? (Round your answer to the nearest cent.)A. $3.34 per unitB. $5.74 per unitOC. $2.40 per unitD. $5.12 per unit...

Selling price per unit is the price at which each unit of product is sold. It is the per unit…

Answered: Sutton Products is a price - setter…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Florentino Allers is the production manager of Electronics Manufacturer. Due to limited capacity, the company can only produce one of two possible products: An industrial motherboard with a 75% probability of making a profit of $1 million and a 25% probability of making a profit of $190,000. A regular motherboard with a 100% chance of making a profit of $710,000.Florentino will get a 20% bonus from his department. Florentino has the responsibility to choose between the two products and is more of a risk-taker, more so than most of the top management at Electronics Manufacturer. A. Which option is Florentino more likely to choose and why? Florentino will choose the industrial motherboard since he is a risk-taker, and a 75% chance of a $1 million profit is much the $fill in the blank 2 (even though there is a 25% chance of a $190,000 profit with the industrial motherboard). B. Which option would the company be more likely to choose and why? The company, being a taker than…

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