Question

The following per unit information is available for a new product of Coronado Industries: Desired ROI...

The following per unit information is available for a new product of Coronado Industries:

Desired ROI $29
Fixed cost 56
Variable cost 60
Total cost 116
Selling price 145


Coronado Industries’s markup percentage would be

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Answer #1

Answer)

Calculation of markup percentage

Since markup is based on the desired Return on Investment, it will be calculated by dividing the desired Return on Investment by the total cost.

Markup percentage = Desired ROI/ Total cost

                                      = $ 29/ $ 116

                                      = 25%

Therefore markup is 25% of total cost.

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