Question

Target profit is $100,000; fixed overhead costs are $120,000 and fixed selling and administrative costs are $50,000. If total variable cost is $675,000, the markup percentage to the variable cost using the variable cost method is:_______________

Answer 1

Answer: the markup percentage= 40 %

Step-by-step explanation:

Markup, usually expressed as a percentage is the price one gets after selling a product from the difference of the purchase cost and selling price. The greater the markup, the more profit after sale of products.

To compute the markup percentage to variable cost using the variable cost method, we use the formulae

Markup=Target profit + fixed overhead cost + fixed selling and administrative costs) / total variable cost

$100,000 + $120,000 +$50,000 /$675,000

=0.4 x 100 = 40%

Markup percentage =40