Evergreen's most popular product sells for $33.00 and has a variable cost of $26.40.On Evergreen's income statement the cost of goods sold per unit is $24.42.What is Evergreen's markup percentage based on cost of goods and based on variable cost per unit?

Question

Quizplus · Accepted Answer

Based on cost of goods: 
Markup = (Price - Cost of Goods Sold) / Cost of Goods Sold
Markup = (33 - 24.42) / 24.42
Markup = 0.35 or 35%

Based on variable cost per unit:
Markup = (Price - Variable Cost) / Variable Cost
Markup = (33 - 26.40) / 26.40
Markup = 0.25 or 25%

The correct answer is B because it matches both markup percentages.

Evergreen's Most Popular Product Sells for $33