Question

Hordel Company needs to determine a markup for a new product Hordel expects to sell 5,000 units and wants a target profit of S102 per unit Additional Information is as follows: Variable costs per Unit Direct materials Direct labor Overhead General and administrative Fixed costs (total) $ 29 Overhead 50 General and administrative 30 31 $ 53,680 42,6ee Using the variable cost method, what markup percentage to variable cost should be used? Multiple Choice

o 70.1%
o 88.2%
o 84.1%
o 81.7%
o 86.6%

Answer 1

The correct answer is not listed. To determine the markup percentage to variable cost, calculate the total variable cost per unit and the target profit per unit. Divide the target profit per unit by the total variable cost per unit and multiply by 100 to find the markup percentage to variable cost.

Step-by-step explanation:

To determine the markup percentage to variable cost, we need to calculate the total variable cost per unit and the target profit per unit. The total variable cost per unit can be found by adding the direct materials, direct labor, and overhead costs together.

For this product, the total variable cost per unit is $29 + $50 + $30 = $109. The markup percentage to variable cost can be calculated by dividing the target profit per unit by the total variable cost per unit and multiplying by 100. In this case, the target profit per unit is $102. Therefore, the markup percentage to variable cost is ($102 / $109) * 100 = 93.58%, which is not one of the provided options.