Acc 346 managerial accounting e11-3 (mucky duck makes swimsuits )

If Mucky Duck is using a cost-plus pricing model for its All-Body swimsuit, the selling price would be 25% above the cost of production. The cost includes any direct costs associated with producing the swimsuit such as materials, labor, etc., plus an additional percentage to cover administrative and overhead expenses.

First, it is important to determine all of the direct costs associated with making the All-Body swimsuit which will be used in determining the total costs. This could include materials such as fabric and stitching thread, labor for cutting and sewing pieces together, transportation fees to get products from suppliers or stores if necessary, taxes such as sales tax on purchasing raw materials used in production, etc. Once all of these costs are calculated then they need to be added together to get a total direct cost figure.

Once we have determined our total cost figure before any mark up amount has been applied we can multiply this by 1.25 (or 25%) which will give us our final sale price after taking into account the 25% markup that Mucky Duck adds onto their prices using this pricing method. So if for example our total base cost was $50 then multiplying this by 1.25 gives us a final sale price of $62.50 – this being what Mucky Duck would charge customers for their All-Body Swimsuit under their current pricing structure when taking into consideration that they use Cost Plus Pricing at a rate of 25%.