Product pricing using the cost-plus approach concepts; differential analysis report for accepting additional business
Twilight Lumina Company recently began production of a new product, the halogen light. which required an investment of $1,200,000 in assets. The costs of producing and selling 20.000 halogen lights are estimated as follows:
Twilight Lumina Company is currently considering establishing a selling price for the halogen light. The president of Twilight Lumina Company has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 20% rate of return on invested assets.
Instructions
Assuming that the product cost concept is used, determine (a) the cost amount per unit, (b) the markup percentage (round to the nearest two decimal places), and (c) the selling price of the halogen light (round to the nearest cent).
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