Johanson Company had the following information: $\begin{array}{lr}
\text { Revenues }&&\$400,000\
\text { Cost of goods sold: }\
\text { Direct materials } & \$ 100,000 \
\text { Direct labor } & 50,000 \
\text { Overhead } & 50,000&\$200,000\
\text { Gross profit } && \$ 200,000 \
\text { Selling and administrative expenses } &&75,000 \
\text { Onerating income } && \$125,000
\end{array}$ What is the markup based on prime costs?
A)300.0%
B)166.7%
C)50.0%
D)133.3%

Question

Quizplus · Accepted Answer

Markup based on prime costs is calculated as [(Selling Price - Prime Cost) / Prime Cost] * 100. Prime costs include direct materials and direct labor, totaling $150,000 ($100,000 + $50,000). The selling price is the revenue, which is $400,000. Thus, the markup is [($400,000 - $150,000) / $150,000] * 100 = 166.7%.

Johanson Company Had the Following Information What Is the Markup Based on Prime Costs? A)300

Johanson Company Had the Following Information What Is the Markup Based on Prime Costs?
A)300