The predicted 2009 costs for Osaka Motors are as follows: Average total assets f
ID: 2449065 • Letter: T
Question
The predicted 2009 costs for Osaka Motors are as follows:
Average total assets for 2009 are predicted to be $8,000,000.
(a) If management desires a 11 percent rate of return on total assets, what are the markup percentages for total variable costs and for total manufacturing costs? (Round your answers to the nearest whole percent.)
Markup on variable costs. Please note the answer is not 220%.
%
Markup on manufacturing costs. Please note the answer is not 267%.
%
Manufacturing Costs Selling and Administrative Costs Variable $100,000 Variable $300,000 Fixed 230,000 Fixed 200,000Explanation / Answer
Solution :
Manufacturing Costs
Selling and Administrative Costs
TOTAL
Variable
100,000
Variable
300,000
400,000
Fixed
230,000
Fixed
200,000
430,000
TOTAL
330,000
500,000
Markup % of total Variable cost
Desired return
880000
(8000000x11%)
Variable cost
400,000
Markup
1280000
Markup % of total Variable cost
320.00%
(1280000/400000x100)
Markup % of total manufacturnig cost
Desired return
880000
(8000000x11%)
total Manufacturing cost
330,000
Markup
1210000
Markup % of total manufacturnig cost
366.67%
(1210000/330000x100)
Manufacturing Costs
Selling and Administrative Costs
TOTAL
Variable
100,000
Variable
300,000
400,000
Fixed
230,000
Fixed
200,000
430,000
TOTAL
330,000
500,000
Markup % of total Variable cost
Desired return
880000
(8000000x11%)
Variable cost
400,000
Markup
1280000
Markup % of total Variable cost
320.00%
(1280000/400000x100)
Markup % of total manufacturnig cost
Desired return
880000
(8000000x11%)
total Manufacturing cost
330,000
Markup
1210000
Markup % of total manufacturnig cost
366.67%
(1210000/330000x100)
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