Assume a manufacturer with fixed costs of $100,000,a variable cost of $10,and expected sales of 50,000 units wants to earn a 20 percent markup on sales.What is the manufacturer's markup price?
A)$14
B)$18
C)$15
D)$18.50
E)none of the above

Question

Quizplus · Accepted Answer

To find the markup price, first calculate the total cost: Fixed costs ($100,000) + Variable costs ($10 * 50,000 units) = $600,000. To achieve a 20% markup on sales, the sales price must cover the total cost plus 20% of the sales price. Let P be the price per unit. Then, 50,000P = $600,000 + 0.2(50,000P). Solving for P gives P = $15.

Assume a Manufacturer with Fixed Costs of $100,000,a Variable Cost