$2-$Setting Product Prices

LEARNING OBJECTIVE: Determine the selling price of a product using the cost$-$plus method, the product cost method and the target costing method.

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Rock Hill Relaxation Company sells vitamin supplements. They have collected the following budget information about the $10,000$ bottles of supplements they expect to sell; Total Direct Material Cost $$27,000,$ Total Direct Labor Cost $$15,000,$ Total Manufacturing Overhead Cost $$12,000,$ Total Selling and Administrative Expenses $$8,000.$ Rock Hill's desired profit is a $50\%$ return on investment of their $$90,000$ of total assets.

At what amount should Rock Hill price its supplements, if they are using the Product Cost Method of pricing?

a$.)$ $$15\mathrm{.}75$

b$.)$ $$5\mathrm{.}30$

c$.)$ $$13\mathrm{.}65$

d$)$ $$10\mathrm{.}70$