Nancy Company has budgeted sales of $300,000 with the following budgeted costs:

Question

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. (70000/230000)*100=30.43%

2. (70000/150000)*100=46.67%

3. (70000/130000)*100=53.85%

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