Question: The McDermott Company estimates its average total cost to be $10 per unit of output when it produces 10,000 units, which it regards as 80%

The McDermott Company estimates its average total cost to be $10 per unit of output when it produces 10,000 units, which it regards as 80% of capacity. Its goal is to earn 20% on its total investment, which is $250,000.
a. If the company uses cost-plus pricing, what price should it set?
b. Can it be sure of selling 10,000 units if it sets this price?
c. What are the arguments for and against a pricing policy of this sort?

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