Respuesta :
According to the given information, The markup percentage to the variable cost using the variable cost method is 40%.
Total fixed cost
= Fixed overhead costs + Fixed selling and administrative costs
= $120,000 + $50,00
= $170,000
The markup percentage to the variable cost
= (Target profit + Total fixed cost) / Total variable cost
= ($100,000 + $170,000) / $675,000
= $270,000 / $675,000
= 0.40, or 40%.
- The markup percentage calculates the difference between the cost to the seller of an item and the price that is charged to the final consumer. A company makes more money when its markup, expressed as a percentage of cost, is higher.
- The markup percentage measures how much a product makes over its cost.
- Businesses that sell tangible goods in markets where prices are based on the expense of purchasing more will find it most helpful.
- The markup percentages vary by sector and item. There is no absolute best practice other than determining a price that benefits both your company and your clients.
- Since the calculations are predictable and fixed, markup percentage is most useful when used on products with discrete marginal costs.
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