Swan Company produces its product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-The markup percentage on product cost is
A)80%
B)47%
C)70%
D)110%

Question

Swan Company produces its product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.​
-The markup percentage on product cost is
A)80%
B)47%
C)70%
D)110%

Quizplus · Accepted Answer

The markup percentage on product cost is calculated as (Desired Profit / Product Cost) * 100. The product cost excludes selling and administrative costs, so it is $43 - $8 = $35 per unit. The desired profit is $20 per unit. Therefore, the markup percentage is ($20 / $35) * 100 = 57.14%, which is not an option provided. However, if we consider the markup on total cost including selling and administrative costs, the calculation should be ($20 / $43) * 100 = 46.51%, which is also not an option provided. It seems there was a mistake in my initial calculation or interpretation of the options. The correct approach to find the markup percentage on the total cost (excluding selling and administrative costs) is to consider the total cost as the variable cost plus the fixed cost (excluding the selling and administrative costs), which is $35 here. The markup is then calculated on this cost base. However, without the exact breakdown of the fixed and variable costs excluding selling and administrative costs, we cannot accurately calculate the markup percentage based on the provided options. My initial response was incorrect due to a misunderstanding of the question's requirements and the provided options.

Swan Company Produces Its Product at a Total Cost of $43