Johnson Marine has the following costs and expected sales for the coming year.Johnson is considering a number of different methods to determine the price of its product.
If Johnson determines price using a desired gross margin percentage of 50%,the price is:
A)$262.50
B)$306.00
C)$375.00
D)$364.29
E)$330.00

Question

Johnson Marine has the following costs and expected sales for the coming year.Johnson is considering a number of different methods to determine the price of its product. 
If Johnson determines price using a desired gross margin percentage of 50%,the price is:
A)$262.50 
B)$306.00 
C)$375.00 
D)$364.29 
E)$330.00

Quizplus · Accepted Answer

To calculate the price using a desired gross margin percentage of 50%, we need to use the formula:

Price = (Total cost / (1 - Desired gross margin percentage))

From the provided data, we know that the total cost is $250,000 and the desired gross margin percentage is 50%. Plugging these values into the formula, we get:

Price = ($250,000 / (1 - 0.5)) = $500,000

Therefore, the price of the product is $375.00 (Option C).

Johnson Marine Has the Following Costs and Expected Sales for the Coming