The predicted 2014 costs for Osaka Motors are as follows: Average total assets f

Question

The predicted 2014 costs for Osaka Motors are as follows:

Average total assets for 2014 are predicted to be $5,000,000.

(a) If management desires a 12 percent rate of return on total assets, what are the markup percentages for total variable costs and for total manufacturing costs? (Round your answer to the nearest whole percent.)

Markup on variable costs Answer

%
Markup on manufacturing costs Answer %

(b) If the company desires a 10 percent rate of return on total assets, what is the markup percentage on total manufacturing costs for (1) unassigned costs and (2) desired profit? (Round your answer to the nearest whole percent.)

Markup to cover unassigned costs Answer

%
Markup to cover desired profit Answer %

Manufacturing Costs Selling and Administrative Costs Variable $ 100,000 Variable $300,000 Fixed 220,000 Fixed 200,000

Explanation / Answer

Desired Return= 500000*12%= 60000 Calculation of sales for manufacturing Unit Sales 380000 Less Variable cost 100000 Mark up %= 60000/320000*100 Contribution 280000 18.75% Less Fixed cost 220000 Profit 60000 Calculation of sales for Selling and administrative expenses sales 560000 less variable cost 300000 contribution 260000 Mark up %= 60000/500000*100 less fixed cost 200000 12% profit 60000

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