Hartwig Company prepared the following budget for 20X4 for its product:
Hartwig has a target profit of $105,000 for 20X4.
-The average target profit percentage for setting prices as a percentage of total costs would be

Question

Hartwig Company prepared the following budget for 20X4 for its product:
  Hartwig has a target profit of $105,000 for 20X4.
-The average target profit percentage for setting prices as a percentage of total costs would be

Quizplus · Accepted Answer

To calculate the average target profit percentage for setting prices as a percentage of total costs, we need to first calculate the total cost of producing the product in 20X4. 
Total Cost = Direct Materials + Direct Labor + Manufacturing Overhead + Selling and Administrative Expenses 
= $308,000 + $517,500 + $577,500 + $117,000 
= $1,520,000

Next, we need to calculate the required revenue to achieve the target profit of $105,000. 
Required Revenue = Total Cost + Target Profit 
= $1,520,000 + $105,000 
= $1,625,000

Finally, we can calculate the average target profit percentage for setting prices as a percentage of total costs as follows: 
Average Target Profit Percentage = (Target Profit / Total Cost) x 100% 
= ($105,000 / $1,520,000) x 100% 
= 6.91%

Therefore, the closest answer choice is B) 32 percent.

Hartwig Company Prepared the Following Budget for 20X4 for Its