Kirk Co. manufactures mobile cellular equipment and develops a price for the product by using a variable cost concept. Kirk incurs variable costs of $1,900,000 in the production of 100,000 units. Fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return on assets.
(a)Compute a markup percentage based on the variable costs concept.
(b) Detemine a selling price.

Question

Kirk Co. manufactures mobile cellular equipment and develops a price for the product by using a variable cost concept. Kirk incurs variable costs of $1,900,000 in the production of 100,000 units. Fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return on assets.
 (a)Compute a markup percentage based on the variable costs concept.
(b) Detemine a selling price.

Quizplus · Accepted Answer

The Answer of Kirk Co. manufactures mobile cellular equipment and develops a price for the product by using a variable cost concept. Kirk incurs variable costs of $1,900,000 in the production of 100,000 units. Fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return on assets.
 (a)Compute a markup percentage based on the variable costs concept.
(b) Detemine a selling price.

Kirk Co Manufactures Mobile Cellular Equipment and Develops a Price for for the Product