Williams Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: $$\begin{array} { l r }
\text { Materials } & \$ 35,000 \
\text { Labor } & 25,000 \
\text { Overhead: } & \
\text { Variable } & 30,000 \
\text { Fixed } & 15,000 \
\text { Selling and administrative: } & \
\text { Variable } & 7,500 \
\text { Fixed } & \underline { 12,500 } \
\text { Total costs } & \$ 125,000
\end{array}$$ Williams Industries has a target profit of $50,000.The average target markup for setting prices as a percentage of total costs would be _____.
A)68%
B)47%
C)19%
D)40%

Question

Williams Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: $$\begin{array} { l r } 
\text { Materials } & \$ 35,000 \
\text { Labor } & 25,000 \
\text { Overhead: } & \
\text { Variable } & 30,000 \
\text { Fixed } & 15,000 \
\text { Selling and administrative: } & \
\text { Variable } & 7,500 \
\text { Fixed } & \underline { 12,500 } \
\text { Total costs } & \$ 125,000
\end{array}$$ Williams Industries has a target profit of $50,000.The average target markup for setting prices as a percentage of total costs would be _____.
A)68%
B)47%
C)19%
D)40%

Quizplus · Accepted Answer

The target markup percentage is calculated by dividing the target profit by the total costs and then multiplying by 100. Here, ($50,000 / $125,000) * 100 = 40%.

Williams Industries Budgeted the Following Costs for the Production of Its