Michigan Industries budgeted the following costs for the production of its only product, golf balls, for the next fiscal year: $$\begin{array} { l r }
\text { Materials } & \$ 35,000 \
\text { Labor } & 25,000 \
\text { Overhead: } & \
\text { Variable } & 30,000 \
\text { Fixed } & 15,000 \
\text { Selling and administrative: } & \
\text { Variable } & 7,500 \
\text { Fixed } & \underline { 12,500 } \
\text { Total costs } & \$ 125,000
\end{array}$$ Michigan Industries has a target profit of $50,000._____ is the target price.
A)$125,000
B)$30,000
C)$175,000
D)$111,000

Question

Michigan Industries budgeted the following costs for the production of its only product, golf balls, for the next fiscal year: $$\begin{array} { l r } 
\text { Materials } & \$ 35,000 \
\text { Labor } & 25,000 \
\text { Overhead: } & \
\text { Variable } & 30,000 \
\text { Fixed } & 15,000 \
\text { Selling and administrative: } & \
\text { Variable } & 7,500 \
\text { Fixed } & \underline { 12,500 } \
\text { Total costs } & \$ 125,000
\end{array}$$ Michigan Industries has a target profit of $50,000._____ is the target price.
A)$125,000
B)$30,000
C)$175,000
D)$111,000

Quizplus · Accepted Answer

The target price is calculated by adding the total costs and the target profit. The total costs are $125,000, and the target profit is $50,000, so the target price is $125,000 + $50,000 = $175,000.

Michigan Industries Budgeted the Following Costs for the Production of Its