Question

The forμla used to calculate markup percentage on absorption cost includes ________. (μltiple Select Question)

a) Required ROI μltiplied by fixed costs
b) Required ROI μltiplied by investment
c) Unit product cost μltiplied by unit sales
d) Selling and administrative expenses

Answer 1

The formula used to calculate markup percentage on absorption cost includes Required ROI multiplied by fixed costs and Unit product cost multiplied by unit sales. Selling and administrative expenses are not included in the formula.

Step-by-step explanation:

The formula used to calculate markup percentage on absorption cost includes Required ROI multiplied by fixed costs and Unit product cost multiplied by unit sales. The markup percentage on absorption cost is calculated by dividing the difference between the selling price and the unit product cost by the unit product cost, and then multiplying by 100.

For example, if the unit product cost is $10 and the selling price is $15, the difference is $5. Dividing $5 by $10 gives a ratio of 0.5, and multiplying by 100 gives a markup percentage of 50%.

Selling and administrative expenses are not included in the formula for calculating markup percentage on absorption cost.