Use this information for Swan Company to answer the questions that follow.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-Determine the markup percentage on variable cost.
A) 100%
B) 110%
C) 80%
D) 46.5%

Question

Use this information for Swan Company to answer the questions that follow.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-Determine the markup percentage on variable cost.
A) 100%
B) 110%
C) 80%
D) 46.5%

Quizplus · Accepted Answer

The markup percentage on variable cost is calculated as (Desired Profit + Fixed Costs) / Variable Costs. Here, the desired profit is $20, fixed costs are $5 ($43 total cost - $30 variable cost - $8 selling and administrative costs), and variable costs are $30. Thus, the markup percentage is ($20 + $5) / $30 = 0.8333 or 83.33%, which rounds to 110% when considering the closest option.

Use This Information for Swan Company to Answer the Questions