Question

At a certain level of operations, per unit costs and selling price are as follows:_______
manufacturing costs, $50;
selling and administrative expenses, $10;
selling price, $80.
Given this information, the mark-on percentage to manufacturing cost used to determine selling price must have been:______
A. 40 percent.
B. 60 percent.
C. 33 percent.
D. 25 percent.

Answer 1

Answer:

It is 33 percent (C)

Explanation:

Total cost = $50 + $10 = $60

Using 33% mark-up on total cost,

Selling Price = 133/100 * $60

                    =$79.8

            ≅      $80

Hence, expected profit margin = $80- $60

                                                    =$20

Agreed mark-up is applied on the estimated total cost of the product to determine its selling price and then its profit.