Largo,Inc. ,which uses a volume-based cost system,produces cat condos,and has a gross profit margin of 50%.Direct materials cost $15 per unit,and direct labor costs $10 per unit.Manufacturing overhead is applied at a rate of 200% of direct labor cost.Nonmanufacturing costs are $27 per unit.How much does each cat condo sell for?
A)$50
B)$72
C)$90
D)$144

Question

Quizplus · Accepted Answer

The cost per unit is calculated as follows: Direct materials ($15) + Direct labor ($10) + Manufacturing overhead (200% of $10 = $20) = $45. The gross profit margin is 50%, meaning the selling price is double the cost. Therefore, the selling price is $45 * 2 = $90.

Largo,Inc ,Which Uses a Volume-Based Cost System,produces Cat Condos,and Has