Cynthia Inc manufactures laptops. The following per unit cost information is ava
ID: 2459388 • Letter: C
Question
Cynthia Inc manufactures laptops. The following per unit cost information is available: direct materials $40, direct labor $15, variable manufacturing overhead $15, fixed manufacturing overhead $40, variable selling and administrative expenses $10, and fixed selling and administrative expenses $25. Its desired ROI per unit is $14. Compute its markup percentage using a total cost approach.
Impossible to compute because net income is not given
Markup percentage is the ROI/ variable cost per unit = 17.5%
Markup percentage is the ROI/ total cost per unit =9.66%
Markup percentage is the ROI/ fixed cost per unit = 21.54%
A.Impossible to compute because net income is not given
B.Markup percentage is the ROI/ variable cost per unit = 17.5%
C.Markup percentage is the ROI/ total cost per unit =9.66%
D.Markup percentage is the ROI/ fixed cost per unit = 21.54%
Explanation / Answer
Calculation of the mark up percentage Direct Material 40 Direct Labor 15 Variable Manufacturing Overhead 15 Variable Selling Expenses 10 Fixed Manufacturing Overhead 40 Fixed Selling Expenses 25 Total 145 ROI = 14 ROI / Total Cost 14/145 9.66% The correct option is C. Markup percentage is the ROI/ total cost per unit =9.66%
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