A producer incurred costs of $54,000 for labor and materials and $26,000 for fixed overhead expenses in a year.The firm produced 20,000 units during the year.If the producer desires a profit of $1 per unit in the coming year,what should the producer's selling price be,using average-cost pricing?
A)$3.70
B)$2.30
C)$5.00
D)$6.00
E)The amount cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

A manager usually finds the average cost per unit by studying past records.Dividing the total cost for the last year by all the units produced and sold in that period gives an estimate of the average cost per unit for the next year.To get the price,the producer decides how much profit per unit to add to the average cost per unit.

A Producer Incurred Costs of $54,000 for Labor and Materials