Question

34. Swifty Corporation has gathered the following information concerning one model of shoe: Variable manufacturing costs...

34. Swifty Corporation has gathered the following information concerning one model of shoe:

Variable manufacturing costs $22000
Variable selling and administrative costs $18000
Fixed manufacturing costs $160000
Fixed selling and administrative costs $120000
Investment $1600000
ROI 30%
Planned production and sales 5000 pairs


What is the markup percentage?

a) 171%

b) 150%

c) 1200%

d) 264%

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Answer #1
Calculation of markup percentage
markup percentage = operating income/total cost
operating income = (1600000*30%) = 480000
Calculation of total cost
variable manufacturing costs 22000
add: variable selling & adm cost 18000
add: fixed manufacturing costs 160000
add: fixed selling & adm costs 120000
Total cost 320000
Markup percentage = 480000/320000 = 150%

Option "b" is CORRECT

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