Fine Arts Inc. produces a special kind of light weight, recreational vehicle that has a unique design. It allows the company to follow a cost-plus pricing strategy. It has $9,000,000 of assets and shareholders expect a 10% return on assets. Additional data are as follows: $$\begin{array} { | l | r | l | }
\hline \text { Sales volume } & 4,000 & \text { units per year } \
\hline \text { Variable costs } & \$ 2,000 &\text { per unit } \
\hline \text { Fixed cost } & \$ 3,500,000& \text { per year } \
\hline
\end{array}$$ Using the cost-plus pricing approach, what should be the price per unit?

Question

Fine Arts Inc. produces a special kind of light weight, recreational vehicle that has a unique design. It allows the company to follow a cost-plus pricing strategy. It has $9,000,000 of assets and shareholders expect a 10% return on assets. Additional data are as follows: $$\begin{array} { | l | r | l | } 
\hline \text { Sales volume } & 4,000 & \text { units per year } \
\hline \text { Variable costs } & \$ 2,000 &\text { per unit } \
\hline \text { Fixed cost } & \$ 3,500,000& \text { per year } \
\hline
\end{array}$$ Using the cost-plus pricing approach, what should be the price per unit?

Quizplus · Accepted Answer

The Answer of Fine Arts Inc. produces a special kind of light weight, recreational vehicle that has a unique design. It allows the company to follow a cost-plus pricing strategy. It has $9,000,000 of assets and shareholders expect a 10% return on assets. Additional data are as follows: $$\begin{array} { | l | r | l | } 
\hline \text { Sales volume } & 4,000 & \text { units per year } \
\hline \text { Variable costs } & \$ 2,000 &\text { per unit } \
\hline \text { Fixed cost } & \$ 3,500,000& \text { per year } \
\hline
\end{array}$$ Using the cost-plus pricing approach, what should be the price per unit?

Fine Arts Inc Using the Cost-Plus Pricing Approach, What Should Be the Price