Grand Products is a price-setter that uses the cost-plus pricing approach for pricing its products
These products are unique, artistically designed architectural decorations. Grand produces and sells 6,200 units per year, which represent maximum capacity. Variable costs are $300 per unit. Total fixed costs are $910,000 per year. The CEO has a target of $60,000 in operating income, which he wants to achieve by year-end. Using the cost-plus pricing method, what sales price should Grand use? (Round your answer to the nearest cent.)
A) $309.68 per unit
B) $446.77 per unit
C) $456.45 per unit
D) $156.45 per unit
C .C)
Current variable costs $1,860,000
Plus: Fixed cost 910,000
Full product cost 2,770,000
Plus: Desired profit 60,000
Target revenue $2,830,000
Sales volume / 6,200
Sales price per unit $456.45
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