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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 8,020 units. Additional information is as follows: Variable product cost per unit $ 31 Variable administrative cost per unit 41 Total fixed overhead 48,100 Total fixed administrative 16,060 Using the total cost method what price should Galla charge

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Answer:

Selling price= $100

Explanation:

Giving the following information:

Variable product cost per unit $31

Variable administrative cost per unit 41

Total fixed overhead 48,100

Total fixed administrative 16,060

Markup= 25%

Number of units= 8,020

First, we need to calculate the unitary fixed cost:

Total fixed cost= 48,100 + 16,060= $64,160

Unitary total fixed cost= 64,160/8,020= $8

Now, the total unitary cost:

Total unitary cost= 8 + 31 + 41= $80

Finally, the selling price:

Selling price= 80*1.25

Selling price= $100

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