Carolyn Corporation has predicted the following costs for this year for 25,000 units:
$$\begin{array} { l c c }
& \underline{\text { Manufacturing }} &\underline{\text { Selling and Administrative }} \
\text { Variable } & \$ 800,000 & \$ 200,000 \
\text { Fixed } & \underline{1,000,000} & \underline{500,000} \
\text { Total } & \$ 1,800,000 & \$ 700,000
\end{array}$$ Required:
a. What is the markup on variable costs needed to achieve a target profit of $110,000?
b. What is the initial unit selling price needed to obtain a target profit of $110,000 using the variable cost markup method?
c. What is the manufacturing cost markup needed to obtain a target profit of $110,000?
d. What is the initial unit selling price needed to obtain a target profit of $110,000 using the manufacturing cost markup method?

Question

Carolyn Corporation has predicted the following costs for this year for 25,000 units:
 $$\begin{array} { l c c } 
& \underline{\text { Manufacturing }} &\underline{\text { Selling and Administrative }}  \
\text { Variable } & \$ 800,000 & \$ 200,000 \
\text { Fixed } & \underline{1,000,000} & \underline{500,000} \
\text { Total } & \$ 1,800,000 & \$ 700,000
\end{array}$$ Required:
a. What is the markup on variable costs needed to achieve a target profit of $110,000?
b. What is the initial unit selling price needed to obtain a target profit of $110,000 using the variable cost markup method?
c. What is the manufacturing cost markup needed to obtain a target profit of $110,000?
d. What is the initial unit selling price needed to obtain a target profit of $110,000 using the manufacturing cost markup method?

Quizplus · Accepted Answer

The Answer of Carolyn Corporation has predicted the following costs for this year for 25,000 units:
 $$\begin{array} { l c c } 
& \underline{\text { Manufacturing }} &\underline{\text { Selling and Administrative }}  \
\text { Variable } & \$ 800,000 & \$ 200,000 \
\text { Fixed } & \underline{1,000,000} & \underline{500,000} \
\text { Total } & \$ 1,800,000 & \$ 700,000
\end{array}$$ Required:
a. What is the markup on variable costs needed to achieve a target profit of $110,000?
b. What is the initial unit selling price needed to obtain a target profit of $110,000 using the variable cost markup method?
c. What is the manufacturing cost markup needed to obtain a target profit of $110,000?
d. What is the initial unit selling price needed to obtain a target profit of $110,000 using the manufacturing cost markup method?

Carolyn Corporation Has Predicted the Following Costs for This Year