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6 December, 01:16

AST Electrical provides the following cost information related to its production of electronic circuit boards. Per Unit Variable manufacturing cost $40 Fixed manufacturing cost $30 Variable selling and administrative expenses $ 8 Fixed selling and administrative expenses $12 Desired ROI per unit $15 What is its markup percentage assuming that AST Electrical uses absorption - cost pricing? 16.67%. 54.28%. 50%. 118.75%.

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  1. 6 December, 03:01
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    50%

    Explanation:

    The computation of markup percentage is shown below:-

    Unit Product Cost as per absorption Costing = Variable Manufacturing cost + Fixed manufacturing cost

    = $40 + $30

    = $70

    Mark up needed to achieve Desired ROI per unit = Variable selling and administrative expenses + Fixed selling and administrative expenses + Desired ROI per unit

    = $8 + $12 + $15

    = $35

    Mark up percentage = Mark up needed : Unit Product Cost as per absorption Costing

    = $35 : $70

    = 50%

    So, for computing the markup percentage we simply applied the above formula.
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