Schopp Corporation makes a mechanical stuffed alligator that sings the Martian n

Question

Schopp Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Schopp Corporation’s anticipated annual volume of 536,000 units.

The company has a desired ROI of 24%. It has invested assets of $28,219,000.

I computed a correct total cost of $55.87 and ROI of $12.64

(a) Using absorption-cost pricing, compute the markup percentage. **I calculated 22.62% myself but that wasn't right

(b) Using variable-cost pricing, compute the markup percentage. **I calculated 43.59% myself but that wasn't right

Explanation / Answer

The company has a desired ROI of 24%. It has invested assets of $28,219,000.

I computed a correct total cost of $55.87 and ROI of $12.64

(a) Using absorption-cost pricing, compute the markup percentage. **I calculated 22.62% myself but that wasn't right

(b) Using variable-cost pricing, compute the markup percentage. **I calculated 43.59% myself but that wasn't right

a) Absorption cost pricing markup percentage

= (12.64 +13.84+ (1559760/536000))/ (6.79+10.87+15.16+(3376800/536000))

= 75.127%

b) Using variable-cost pricing, compute the markup percentage.

= (12.64 +(3376800/536000) / (6.79+10.87+15.16+13.84) = 40.59%

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