Question

Mallory Company produces and sells Product X at a total cost of $35 per unit, of which $28 is product cost and $7 is selling and administrative expenses. In addition, the total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit is $8 per unit. Determine the markup percentage on product cost. Round your answer to one decimal place.

Answer 1

Answer:

53.57%

Explanation:

Data provided

Desired profit = $8

Selling and administrative expenses = $7

Product cost = $28

The computation of markup percentage on product cost is shown below:-

Markup percentage = (Desired profit + Selling and administrative expenses) ÷ Product cost × 100

= ($8 + $7) ÷ $28 × 100

= $15 ÷ $28 × 100

= $0.5357 × 100

= 53.57%

Therefore for computing the markup percentage we simply applied the above formula.