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4 March, 17:57

During the current year, Chudrick Corporation expects to produce 9,000 units and has budgeted the following: net income $378,000, variable costs $1,156,000, and fixed costs $104,000. It has invested assets of $1,890,000. The company's budgeted ROI was 20%. What was its budgeted markup percentage using a full-cost approach?

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  1. 4 March, 18:45
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    Mark-up = 30%

    Explanation:

    Mark-up is profit expressed as a percentage of the total production cost.

    Full cost per unit = (Variable cost + Fixed cost) / No of units

    Full cost per unit = (1,156,000 + 104,000) / 9000 = 140 per unit

    Profit per unit = Net income / No of units

    =378,000/9,000

    = $42 per unit

    Mark-up = profit per unit/cost per unit

    = 42/140 * 100

    = 30%
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