Question

Waterway Industries produces high definition television sets. The following information is available for this product:

Marigold Corp. has a new product going on the market next year. The following data are projections for production and sales: Variable costs $375000 Fixed costs $450000 ROI 14% Investment $3000000 Sales 300000 units What would the markup percentage be if only 250000 units were sold and Brislin still wanted to earn the desired ROI?

Waterway Industries’s markup percentage would be

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 3 Total cost of 250000 Units = Variable cost+fixed cost 4 = ((375000/300000) *250000) +450000 5 = $ 762500 7 Return on investment required = 3000000*14% 8 = $420000 10 Thus Mark up percentage = (return on investment/total cost)*100 11 = (420000/762500) *100 12 = 55.08 % (rounded off to 2 decimal places) 13 14 Thus the correct answer 15 Waterways Industries markup percentage would be 55.08% 16