The following per unit information is available for a new product of Red Ribbon Company: $$\begin{array} { l r }
\text { Desired ROl } & \$ 20 \
\text { Fixed cost } & 40 \
\text { Variable cost } & 60 \
\text { Total cost } & 100 \
\text { Selling price } & 120
\end{array}$$ Red Ribbon Company's markup percentage would be
A)17%.
B)20%.
C)33%.
D)50%.

Question

The following per unit information is available for a new product of Red Ribbon Company: $$\begin{array} { l r } 
\text { Desired ROl } & \$ 20 \
\text { Fixed cost } & 40 \
\text { Variable cost } & 60 \
\text { Total cost } & 100 \
\text { Selling price } & 120
\end{array}$$ Red Ribbon Company's markup percentage would be
A)17%.
B)20%.
C)33%.
D)50%.

Quizplus · Accepted Answer

The markup percentage is calculated as (Selling Price - Total Cost) / Total Cost. Here, (120 - 100) / 100 = 0.20 or 20%.

The Following Per Unit Information Is Available for a New