If the target profit is $60,000 for a volume of 480 units, fixed costs are $168,000, and the variable cost per unit is $450, then the markup percentage on variable cost would be:
A)27.8%
B)104.56%.
C)105.56%.
D)107.00%.
E)106.85%.

Question

Quizplus · Accepted Answer

First, we need to calculate the total cost per unit:
Total Cost = Fixed Cost + Variable Cost
Total Cost = $168,000 + $450 = $168,450
Next, we need to calculate the target revenue per unit:
Target Revenue = Target Profit + Total Cost
Target Revenue = $60,000 + $168,450 = $228,450
Finally, we can calculate the markup percentage on variable cost:
Markup Percentage = ((Target Revenue - Variable Cost)/Variable Cost)*100%
Markup Percentage = (($228,450 - $450)/$450)*100%
Markup Percentage = 505%/4.78
Markup Percentage = 105.56%
Therefore, the answer is C.

If the Target Profit Is $60,000 for a Volume of 480