At a certain level of operations,per unit costs and selling price are as follows: manufacturing costs,$50;selling and administrative expenses,$10;selling price,$80.Given this information,the mark-on percentage to manufacturing cost used to determine selling price must have been:
A)20 percent.
B)60 percent.
C)33 percent.
D)25 percent.

Question

Quizplus · Accepted Answer

The total cost per unit is the sum of manufacturing costs and selling and administrative expenses, which is $60 ($50 + $10).

The mark-up on cost is the difference between the selling price and the total cost divided by the manufacturing cost, expressed as a percentage.

Using this formula:

Mark-up on cost = (Selling price - Total cost) / Manufacturing cost x 100%

= ($80 - $60) / $50 x 100%

= 40%

Therefore, the mark-up percentage is 40%, which is equivalent to a mark-on percentage of 60% (100% + 40%). The answer is B.

At a Certain Level of Operations,per Unit Costs and Selling