Product Pricing using the Cost-Plus Approach Concepts; Differential Analysis for Accepting Additional Business

Night Glow Inc. recently began production of a new product, the halogen light, which required the investment of $600,000 in assets. The costs of producing and selling 10,000 halogen lights are estimated as follows:

Night Glow Inc. is currently considering establishing a selling price for the halogen light. The president of Night Glow Inc. has decided to use the cost-plus approach to product pricing and has indicated that the halogen light must earn a 10% rate of return on invested assets.

Note: Round all markup percentages to two decimal places, if required.

1. Determine the amount of desired profit from the production and sale of the halogen light. $

2. Assuming that the product cost concept is used, determine the following:

The cost amount per unit.

The markup percentage.

The selling price of the halogen light.

a. Cost amount per unit	$
b. Markup percentage		%
c. Selling price per unit	$

3. Appendix Assuming that the total cost concept is used, determine the following:

The cost amount per unit.

The markup percentage.

The selling price of the halogen light (rounded to nearest whole dollar).

a. Cost amount per unit	$
b. Markup percentage		%
c. Selling price per unit	$

4. Appendix Assuming that the variable cost concept is used, determine the following:

The cost amount per unit.

The markup percentage.

The selling price of the halogen light (rounded to nearest whole dollar).

a. Variable cost amount per unit	$
b. Markup percentage		%
c. Selling price per unit	$