A company expects to produce and sell 9,000 units of a single product.Management desires an 18% return on assets of $1,750,000.The following additional company information is available:
$\begin{array}{lr}
\text { Variable costs (per unit) } & \
\text { Production costs } & \$ 79 \
\text { Nonproduction costs } & \$ 5 \
\text { Fixed costs (in total) } &\
\text { Overhead } & \$ 279,000 \
\text { Nonproduction } & \$ 90,000
\end{array}$

Compute markup per unit.Assume that markup percentage equals desired profit divided by total costs.
A) $35
B) $84
C) $110
D) $125
E) $160

Question

A company expects to produce and sell 9,000 units of a single product.Management desires an 18% return on assets of $1,750,000.The following additional company information is available:
$\begin{array}{lr}
\text { Variable costs (per unit) } & \
\text { Production costs } & \$ 79 \
\text { Nonproduction costs } & \$ 5  \ 
\text { Fixed costs (in total) } &\
\text { Overhead } & \$ 279,000 \
\text { Nonproduction } & \$ 90,000
\end{array}$

Compute markup per unit.Assume that markup percentage equals desired profit divided by total costs.
A) $35
B) $84
C) $110
D) $125
E) $160

Quizplus · Accepted Answer

Markup per unit = (Desired profit / Total costs) x Total costs= (0.18 x $1,750,000) / 9,000 units= $35

A Company Expects to Produce and Sell 9,000 Units of a Single