Question

Question 32

Schuman Corporation produces microwave units. The following per-unit cost information is available: direct materials $38; direct labour $22; variable manufacturing overhead $20; fixed manufacturing overhead $44; variable selling and administrative expenses $12; and fixed selling and administrative expenses $30. Its desired ROI per unit is $28. Calculate the markup percentage using variable-cost pricing. (Round answer to 2 decimal places, e.g. 15.25%.)

Answer 1

Given data :

direct materials $38

direct labour $22

variable manufacturing overhead $20

administrative expenses $12;

fixed manufacturing overhead $44

fixed administrative expenses $30

desired ROI per unit is $28

REQURIED:

Markup percentage using variable-cost pricing?

SOLUTION:

MARK UP PERCENTAGE USING VARIABLE - COST PRICING :

ROI per unit + Total fixed Cost / variable cost

= 28 + 74 / 92

= 102 / 92

=      1.11

Therefore,variable cost price is $ 1.11