Maggie Co.has variable manufacturing costs per unit of $20, and fixed manufacturing cost per unit is $10.Variable selling and administrative costs per unit are $5, while fixed selling and administrative costs per unit $2.Maggie desires an ROI of $8 per unit.If Maggie Co.uses the variable cost-plus approach, what is its markup percentage?
A)50%
B)80%
C)30%
D)100%

Question

Quizplus · Accepted Answer

Using the variable cost-plus approach, the markup percentage can be calculated as follows:

Markup percentage = (Desired ROI + Fixed costs per unit) / Variable costs per unit

Fixed costs per unit = Fixed manufacturing cost per unit + Fixed selling and administrative cost per unit = $10 + $2 = $12

Variable costs per unit = Variable manufacturing cost per unit + Variable selling and administrative cost per unit = $20 + $5 = $25

Substituting the values:

Markup percentage = ($8 + $12) / $25 = 80%

Therefore, the markup percentage of Maggie Co. is 80%.

Maggie CoHas Variable Manufacturing Costs Per Unit of $20, and Fixed