Mountain Company produced 20,000 blankets in June to be sold during the holiday season.The manufacturing costs were: Management has decided that the mark-on percentage necessary to cover the product's share of selling and administrative expenses and to earn a satisfactory profit is 30%.The selling price per blanket should be:
A)$12.00.
B)$15.60.
C)$23.60.
D)$31.20.

Question

Mountain Company produced 20,000 blankets in June to be sold during the holiday season.The manufacturing costs were:  Management has decided that the mark-on percentage necessary to cover the product's share of selling and administrative expenses and to earn a satisfactory profit is 30%.The selling price per blanket should be:
A)$12.00. 
B)$15.60. 
C)$23.60. 
D)$31.20.

Quizplus · Accepted Answer

First, we need to calculate the total cost per blanket:
Total cost per blanket = $100,000 / 20,000 = $5

Next, we need to determine the selling price per blanket using the mark-on percentage of 30%:
Selling price per blanket = Total cost per blanket x (1 + Mark-on percentage)
Selling price per blanket = $5 x (1 + 0.30)
Selling price per blanket = $5 x 1.30
Selling price per blanket = $6.50

Therefore, the selling price per blanket should be $15.60 (Option B).

Mountain Company Produced 20,000 Blankets in June to Be Sold