The McDermott Company estimates its average total cost to be $10 per unit of output

| November 24, 2016

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% of capacity. Its goals is to earn 20% percent 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 is sets this price?

C) What are the argument for and against a pricing policing policy of this sort?

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