# Nancy Company has budgeted sales of \$300,000 with the following budgeted costs:

Direct materials \$60,000

Direct manufacturing labor 40,000

Variable 30,000

Fixed 50,000

Variable 20,000

Fixed 30,000

Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product (5 points)

Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product (5 points)

Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs (5 points)

Question ID
524524

Created
April 3, 2011 3:07am UTC

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0

1

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1. a) Compute the average markup percentage for setting prices as a percentage of the full cost of the product.

\$60,000 + \$40,000 + \$30,000 + \$50,000 + \$20,000 + \$30,000 = \$230,000

(\$300,000 - \$230,000)/\$230,000 = 30.4%

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b) Compute the average markup percentage for setting prices as a percentage of the variable cost of the product.

b. \$60,000 + \$40,000 + \$30,000 + \$20,000 = \$150,000

(\$300,000 - \$150,000)/\$150,000 = 100%

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c) Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs.

\$60,000 + \$40,000 + \$30,000 = \$130,000

(\$300,000 - \$130,000)/\$130,000 = 130.8%

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\$60,000 + \$40,000 + \$30,000 + \$50,000 = \$180,000

(\$300,000 - \$180,000)/\$180,000 = 66.7%