Bellair Company produces a product that has manufacturing cost of $30 per unit.Bellair's policy is to charge a price equal to cost plus 30%.The 30% is pure profit to Bellair.

Question

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Bellair's policy is to charge a price equal to cost plus 30%, meaning they are adding 30% to the cost which includes both cost and profit. Therefore, the selling price would be $39/unit (30% of $30 = $9 + $30 = $39) out of which $9 is profit for Bellair, not pure profit.

Bellair Company Produces a Product That Has Manufacturing Cost of $30