Question

Bonita Industries has gathered the following information concerning one model of shoe: Variable manufacturing costs $28000 Variable selling and administrative costs $12000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1600000 ROI 30% Planned production and sales 5000 pairs What is the markup percentage?

Answer 1

Answer:

Markup percentage = 150%

Explanation:

Markup = Selling Price - Cost

Total Cost = Variable + Fixed

Variable Costs = Manufacturing + Selling and Administrative

= $28,000 + $12,000 = $40,000

Fixed Costs = Manufacturing + Selling and Administrative

= $160,000 + $120,000 = $280,000

Total Cost = $40,000 + $280,000 = $320,000

Cost per unit = $320,000/ 5,000 = $64 per unit

Return on Investment = $1,600,000 X 30% = $480,000

Selling Value = Total Cost + Profit or Return = $320,000 + $480,000 = $800,000

Selling Price per unit = $800,000/5,000 = $160

Markup Percentage = $\frac{Selling price - Cost per unit}{Cost per unit}  X 100$

= $\frac{160-64}{64} X 100 = 150$ percent

= 150%