Praduct Pricing using the CastPlus Approach Methods Differen

Praduct Pricing using the Cast-Plus Approach Methods; Differential Analysis for Accepting Additional Business Night Glo Inc. recently began production f a new product, the halogen light, which required the investment of 1,980,000 in assets. The costs of producing and selling 9,900 halogen lights are estimated as follows: Variable costs per unit: Direct materials Direct labor Factory overhead Selling and administrative expenses Total variable cost per unit Night Glow Inc is currently considering establishing a selling price for the halogen ght. The president of Night Glow Inc. has decided to use the cost-plus approach to product pridng and has indicated that the halogen light must earn a 20% return on Invested assets. Required: Note: Round all markup percentages to two decimal places, if required. Round all costs per unit and selling prices per unit to the nearest whole dollar 1. Determine the amount of desired profit from the production and sale of halogen lights. Fixed costs: $99 Factory overhead 5396,000 1 Selling and administrative expenises 45 39 108,000 204 2. Assuming that the product cost methad is used, determine the following a. Cost amount per unit b. Markup Percentage C. Selling price per unit 3. (Appendo) Assuming that the total cost method is used, determine the following: a. Cost amount per unit b. Markup Percentage c. Selling price per unit 4. (Appendoc) Assuming that the variable cost method is used, determine the following: a. Variable cost amount per unit b. Markup Percentage c. Selling price per unit

Solution

4.

6.a.

1.Desired profit from the producion and sale of halogen lights
$	396000
Working:
Investned assets	1980000
Desired profit margin	20%