Asked by Amber Porter on May 11, 2024
Verified
M Studios buys cameras at a unit cost of $250. Their operating expense is 40% per unit of cost, and their desired unit operating profit is 30% of cost. What selling price should M Studios advertise for the camera?
A) $425
B) $350
C) $325
D) $320
E) $375
Operating Expense
Recurring expenses incurred during regular business operations, such as salaries, utilities, and rent.
Operating Profit
Operating Profit refers to the profit earned from a firm's core business operations, excluding deductions of interest and taxes.
Selling Price
The amount of money for which a product or service is sold to the buyer.
- Absorb the knowledge to compute mark-up rates and ascertain selling prices for business purposes.
Verified Answer
LB
Logan BurkhartMay 16, 2024
Final Answer :
A
Explanation :
The total cost per unit including the operating expense is $250 + (40% of $250) = $250 + $100 = $350. The desired profit is 30% of the cost, which is 30% of $250 = $75. Therefore, the selling price should be $350 + $75 = $425.
Learning Objectives
- Absorb the knowledge to compute mark-up rates and ascertain selling prices for business purposes.