A firm's total costs are $400,000; its profit goal is $50,000. If it makes 10,000 units, the cost-plus price per unit is $40.

Name: A firm's total costs are $400,000; its profit goal is $50,000. If it makes 10,000 units, the cost-plus price per unit is $40.
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Question

Quizplus · Accepted Answer

To calculate the cost-plus price per unit, you first add the total costs ($400,000) to the profit goal ($50,000) to get $450,000. Then, divide by the number of units (10,000) to find the price per unit, which is $45, not $40.

A Firm's Total Costs Are $400,000; Its Profit Goal Is