Homework Answers
Solution:
Total manufacturing costs = $250,000 + $450,000 = $700,000
Desired profit = $5,000,000*10% = $500,000
Total markup required on manufacturing cost to cover profit and selling and administrative expenses
= $500,000 + ($600,000 + $300,000) = $1,400,000
Total markup percentage on manufacturing cost for desired profit = $1,400,000 / $700,000 = 200%
Hence option c is correct.
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