Question

pauley company needs to determine a markup for a new product. pauley expects to sell 15,000 units and wants a target profit of $38 per unit. additional information is as follows: variable costs per unit fixed costs (total) direct materials $ 16 overhead $ 50,950 direct labor 17 general and administrative 57,950 overhead 10 general and administrative 19 using the variable cost method, what markup percentage to variable cost should be used?

Answer 1

If pauley company needs to determine a markup for a new product. The markup percentage to variable cost should be used is: 137%

How to find the markup percentage to variable cost?

Calculation for Total variable costs

Variable product cost per unit $16

Variable administrative cost per unit $17

Total variable costs =$33

Using this formula to find the  markup percentage to variable cost

Markup percentage=[(Target profit + Fixed overhead costs + Fixed administrative costs) / Total variable costs

Let plug in the formula

Markup percentage=[($38× 15,000 units)+$50,950 +$57,950]/$33×15,000)

Markup percentage=($570,000+$50,950 +$57,950)/$495,000

Markup percentage=$678,900/$495,000

Markup percentage=137%

Therefore the markup percentage to variable cost that should be used will be 127%

Learn more about markup percentage here:https://brainly.com/question/17171556

#SPJ1