Galla inc. needs to determine a price for a new product. galla desires a 25% markup on the total cost of the product. galla expects to sell 5,020 units. additional information is as follows: variable product cost per unit $ 16 variable administrative cost per unit 11 total fixed overhead 45,100 total fixed administrative 20,160 using the total cost method what price should galla charge?

price for a new product is $50

Explanation:

given data

expects sell = 5,020 units

Variable product  = $16 cost per unit

Variable administrative = 11 cost per unit

Total fixed overhead = 45,100

Total fixed administrative = 20,160

to find out

price for a new product

solution

first we get here Variable product cost and Variable administrative cost that is

Variable product cost = $16 × 5020

Variable product cost = $80320

and

Variable administrative cost = $11 × 5020

Variable administrative cost = $55220

so

total coast is = $80320 + $55220 + $45,100  + $20,160

total coast is = $200800

and

Total cost per unit will be =

Total cost per unit will be $40

and Mark up @ 25 = 0.25 × $40

mark up = $10

so Selling Price will be = Total cost per unit + mark up

Selling Price = $40 + ₹10

selling price = $50

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