Sansom Industries manufactures car radios to be installed in Ford automobiles. The unit variable cost is $25 and the unit fixed cost is $7. The desired return on investment (ROI) per unit is $8. What is the markup percentage that Sansom Industries uses to determine the price for each radio produced using a cost-plus pricing method?
A) 15%
B) 20%
C) 25%
D) 32%

Question

Quizplus · Accepted Answer

Unit Variable Cost + Unit Fixed Cost = Total Unit Cost; $25 + $7 + $32; ROI Markup = Unit ROI/ Total Unit Cost = $8/$32 = 25%

Sansom Industries Manufactures Car Radios to Be Installed in Ford