Problem 1 - Nancy Company has budgeted sales of $300,000 with the following budg

Question

Problem 1 - Nancy Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials $60,000 Direct manufacturing labor 40,000 Factory overhead Variable 30,000 Fixed 50,000 Selling and administrative expenses Variable 20,000 Fixed 30,000 Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points) Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points) Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)

Explanation / Answer

1. Full cost = 60000+40000+30000+50000+20000+30000 = 230,000 Sales budgeted = $ 300,000 Profit envisaged = 70,000 So mark-up on full cost = 70,000/230,000 = 30.43% 2. Profit envisaged = 70,000 So mark-up on the variable costs = 70,000/(60000+40000+30000+20000)=70000/150000 = 46.67% Profit envisaged = 70,000 So mark-up on the variable manufacturing costs = 70,000/(60000+40000+30000)=70000/130000 = 53.85% 3. Profit envisaged = 70,000 So mark-up on the variable manufacturing costs = 70,000/(60000+40000+30000)=70000/130000 = 53.85%

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.