Question

Schuman Corporation produces microwave units. The following per-unit cost information is available: direct materials $37; direct labour $25; variable manufacturing overhead $17; fixed manufacturing overhead $41; variable selling and administrative expenses $12; and fixed selling and administrative expenses $29. Its desired ROI per unit is $31.92. Calculate the markup percentage using variable-cost pricing. (Round answer to 2 decimal places, e.g. 15.25%.)

Markup percentage

%

adong Remanufacturing rebuilds spot welders for manufacturers. The following budgeted cost data for 2020 are available for Padong: Time Charges Material Loading Charges Technicians’ wages and benefits $262,350 Parts manager’s salary and benefits $43,470 Office employee’s salary and benefits 63,600 16,560 Other overhead 23,850 30,015 Total budgeted costs $349,800 $90,045 The company wants a $35 profit margin per hour of labour and a 30% profit margin on parts. It has budgeted for 7,950 hours of repair time in the coming year and estimates that the total invoice cost of parts and materials in 2020 will be $414,000.

(a) Calculate the rate charged per hour of labour. Rate charged $ per hour

Answer 1

Markup amount = Desired ROI per unit + Fixed costs per unit

= $31.92 + ($41 + $29)

= $101.92

And

Sales price per unit = Variable cost per unit + Markup amount

= ($37 + $25 + $17 + $12) + $101.92

= $192.92

therefore markup percentage = markup amount/sales price per unit

= $101.92/$192.92

= 52.83%