Athmer Corporation
Athmer Corporation sells a product for $18 per unit,and the standard cost card for the product shows the following costs:
Direct material $ \$ 1 $
Directlabor 2
$\text { Overhe ad (80\% fixed) }$ $\underline{7}$
Total $\underline{\$10}$

Refer to Athmer Corporation.Assume that Athmer has sufficient idle capacity to produce the 1,000 units.If Athmer wants to increase its operating profit by $5,600,what would it charge as a per-unit selling price?

Question

Athmer Corporation
Athmer Corporation sells a product for $18 per unit,and the standard cost card for the product shows the following costs:
Direct material                                $ \$ 1 $
Directlabor                                        2 
$\text { Overhe ad (80\% fixed) }$                        $\underline{7}$
Total                                                $\underline{\$10}$

Refer to Athmer Corporation.Assume that Athmer has sufficient idle capacity to produce the 1,000 units.If Athmer wants to increase its operating profit by $5,600,what would it charge as a per-unit selling price?

Quizplus · Accepted Answer

To increase operating profit by $5,600 with an additional 1,000 units, Athmer needs to add $5.60 ($5,600 / 1,000 units) to the total cost per unit of $10. Therefore, the new selling price per unit should be $10 + $5.60 = $15.60. However, since $15.60 is not an option and there seems to be a misunderstanding in the calculation or the options provided, the closest correct approach based on the given options and aiming for an increase in profit would involve considering the profit margin per unit. Without the exact option matching the calculated increase, the principle involves covering costs and adding the desired profit increase per unit.

Athmer Corporation Athmer Corporation Sells a Product for $18 Per $1 \$ 1 $1

Athmer Corporation
Athmer Corporation Sells a Product for $18 Per $\$ 1$