Stuart Company Uses The Total Cost Method

Q1. Stuart Company uses the total cost method to set our selling price. Management expects to produce and sell 50,000 units of the company’s product. Variable costs are comprised of production costs in the amount of $20 per unit and nonproduction costs in the amount of $10 per unit. Fixed costs are comprised of overhead in the amount of $200,000 and nonproduction costs in the amount of $50,000. Total costs and total costs per unit equal:

• $750,000 and $15
• $1,200,000 and $24
• $1,750,000 and $35
• $1,500,000 and $30

Q2. Stuart Company uses the total cost method to set our selling price. Management expects to produce and sell 50,000 units of the company’s product and desires a profit of 20%. Production costs amount to $1,200,000 and nonproduction costs amount to $550,000 for a total cost of $1,750,000. Total cost per unit equals $35. The markup per unit is closest to:

• $7.00
• $1.75
• $42.00
• $10.15

Q3. Stuart Company uses the total cost method to set our selling price. Management expects to produce and sell 50,000 units of the company’s product and desires a profit of 20%. Production costs amount to $1,200,000 and nonproduction costs amount to $550,000 for a total cost of $1,750,000. Total cost per unit equals $35. Before considering other factors, such as consumer preferences and competition, the per unit selling price will be:

• $7.00
• $42.00
• $28.00
• $49.00