Bythel Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Bythel desires a profit equal to a 10.8% rate of return on invested assets of $900,000. $\begin{array}{ll}
\$ 72,000 & \text { Fixed factory overhead cost } \
45,000 & \text { Fixed selling and administrative costs } \
4.50 & \text { Variable direct materials cost per unit } \
7.65 & \text { Variable direct labor cost per unit } \
2.25 & \text { Variable factory overhead cost per unit } \
0.90 & \text { Variable selling and administrative cost per unit }
\end{array}$
Refer to the information provided for Bythel Corporation. The markup percentage for the company's product is:
A) 21.0%.
B) 25.4%.
C) 15.7%.
D) 24.0%.

Question

Bythel Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Bythel desires a profit equal to a 10.8% rate of return on invested assets of $900,000. $\begin{array}{ll}
\$ 72,000 & \text { Fixed factory overhead cost } \
45,000 & \text { Fixed selling and administrative costs } \
4.50 & \text { Variable direct materials cost per unit } \
7.65 & \text { Variable direct labor cost per unit } \
2.25 & \text { Variable factory overhead cost per unit } \
0.90 & \text { Variable selling and administrative cost per unit }
\end{array}$
 Refer to the information provided for Bythel Corporation. The markup percentage for the company's product is:
A) 21.0%.
B) 25.4%.
C) 15.7%.
D) 24.0%.

Quizplus · Accepted Answer

The total cost per unit is calculated by adding all variable costs per unit and allocating fixed costs per unit. The desired profit is calculated as 10.8% of $900,000, which is $97,200. The markup percentage is calculated by dividing the desired profit by the total cost and multiplying by 100.

Bythel Corporation Uses the Product Cost Concept of Product Pricing