There are many ways to decide the price of the product. One of them is – Variable cost method Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs. First we calculate the mark-up percentage – M a r k u p p e r c e n t a g e = T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s T o t a l v a r i a b l e c o s t s This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit. Now, the selling price is decided as under – S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + ( T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e ) S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p This is how, we calculate the selling price per unit in case of variable costs method. To compute: Selling price using the variable costs method.

Question

Want to see the full answer?

Answer 1

Question

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

What are the three main financial statements in accounting?

Can you solve this general accounting question with accurate accounting calculations?

Provide Solution Of this Accounting Question without Fail

Answer 2

Question

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Answer 6

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Answer 7

Chapter 25, Problem 32QS

To determine

Concept Introduction:

There are many ways to decide the price of the product. One of them is –

Variable cost method

Under variable cost method, the selling price of the product is decided by using the target profit, fixed overhead costs, fixed selling and administrative costs and total variable costs.

First we calculate the mark-up percentage –

$M a r k u p p e r c e n t a g e = \frac{T a r g e t p r o f i t + F i x e d o v e r h e a d c o s t s + F i x e d s e l l i n g a n d a d m i n i s t r a t i v e c o s t s}{T o t a l v a r i a b l e c o s t s}$

This is how we obtain the mark up percentage. Then the mark up percentage is added to total variable costs per unit to know the selling price per unit.

Now, the selling price is decided as under –

$\begin{array}{l} S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + (T o t a l v a r i a b l e c o s t X M a r k u p p e r c e n t a g e) \\ S e l l i n g p r i c e p e r u n i t = T o t a l v a r i a b l e c o s t + T o t a l M a r k u p \end{array}$

This is how, we calculate the selling price per unit in case of variable costs method.

To compute:

Selling price using the variable costs method.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 25 - Prob. 1DQ Ch. 25 - What is capital budgeting?Ch. 25 - Prob. 3DQ Ch. 25 - Prob. 4DQ Ch. 25 - Prob. 5DQ Ch. 25 - Prob. 6DQ Ch. 25 - Prob. 7DQ Ch. 25 - Prob. 8DQ Ch. 25 - Prob. 9DQ Ch. 25 - Prob. 10DQ

Want to see the full answer?

Chapter 25 Solutions