1. A company has $27 per unit in variable costs and $1,000,000 per year in fixed costs. Demand is approximated to be 100,000 units annually. Determine the price if the mark up of 40% on total cost is used to find out the price?
i) $51.80
ii) $37
iii) $27
iv) $37.80
2. Company using activity based pricing marks up direct cost of goods by 30% plus charges customers for indirect costs based on activities utilized by customer. Indirect costs are charged as follows: $8.00 per order placed; $4.00 per separate item ordered; $30.00 per return. Customer places 10 orders with total direct cost of $3,000, orders 300 separate items, and makes 5 returns. What will the customer are charged?
i) $5,330
ii) $3,000
iii) $5,759
iv) $3,900