c) Variable costs Markup to cover fixed costs ($310,400/$580,000) x $24 Markup t

Question

c)

Variable costs

Markup to cover fixed costs ($310,400/$580,000) x $24

Markup to provide for a profit ($200,000/$580,000) x $24

$24.00

12.84

8.28

Suggest selling price

$45.12

Any price in excess of $24 increases short-run profits. However, all products must have an average markup of 53.5 percent ($310,400 / $580,000) if Comtel is to remain profitable in the long run. Using this guideline, the suggested markup is at least $12.84 To achieve target profits, all products must have an additional average markup of 34.5 percent ($200,000 / $580,000). Using this guideline, the suggested additional markup is $8.28.

Variable costs

Markup to cover fixed costs ($310,400/$580,000) x $24

Markup to provide for a profit ($200,000/$580,000) x $24

$24.00

12.84

8.28

Suggest selling price

$45.12

Explanation / Answer

Soluton:

(A). Markup Percentage Caluculation:

    Markup Percentage = $ 3,10,400 / $ 5,80,000

= 53.5 %

(B). Murkup Variable Cost :

  Murkup Variable Cost = $ 24

(C). Use Variable Cost Markup Caluculate Suggested Selling Price Flash Drive:

   = $ 45.12 / $ 4

   = $ 11.28

(D).

Variable costs

Markup to cover fixed costs ($310,400/$580,000) x $24

Markup to provide for a profit ($200,000/$580,000) x $24

$24.00

12.84

8.28

Suggest selling price

$45.12

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

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