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bullandre
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| Posted: 20 Feb 2010 at 02:13 | IP Logged
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A compnay expects to produce 100,000units of a product at a total cost of $500,000. The selling price of the product that will provide the company with a 15% before tax return, to the nearest dollar is
a. $0.75
b. $1.15
c. $5.75
d. $7.67
I put "c" though I didn't agree with that answer.
My workings: Let S = selling price per unit
=>100,000S - 500,000 = .15(100,000S)
S = $5.88
Wiley didn't provide a detailed solution but according to their hint:
100,000S - 500,000 = .15(500,000)
S = 5,75
Please provide some insight on this question.
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Xalina
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| Posted: 20 Feb 2010 at 09:36 | IP Logged
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I agree with you. I have no idea why they calculated 15% on costs. Anyone??
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EAK5455
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| Posted: 20 Feb 2010 at 11:39 | IP Logged
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I think this is one of those notorious Wiley questions that has been written incorrectly. I get the $5.88 per unit selling price also. One
other thing to take note of is that the questions states to round the selling price to the nearest dollar. None of the answers are dollar
rounded..... lol.
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Topic: Estimating Selling Price
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