The Big Tool Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials...

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The Big Tool Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials...

The Big Tool Company has budgeted sales of $300,000 with the following budgeted costs:

Direct materials $60,000

Direct manufacturing labor 35,000

Factory overhead

Variable 30,000

Fixed 45,000

Selling and administrative expenses

Variable 20,000

Fixed 25,000

Compute the average markup percentage for setting prices as a percentage of the full cost of the product.

Select one:

a. 106.8%

b. 45%

c. 39.5%

d. 60.9%

business accounting

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Answer 1

Answer #1

Ans :

Direct Materials	$60,000
Direct Manufacturing Labor	$35,000
Factory Overhead
Variable	$30,000
Fixed	$45,000
Selling and Administrative Exps
Variable	$20,000
Fixed	$25,000
Total Cost of Product	$215,000
Add : Profit (300,000 - 215,000)	$85,000
Sales	$300,000

Average markup on Cost = ($85,000 / $215,000) * 100 = 39.5%

Ans : The average markup percentage for setting prices as a percentage of the full cost of the product is 39.5%. Option c is correct

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Answer 2

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