Rap Corporation produces outdoor portable fireplace units. The following per uni

Question

Rap Corporation produces outdoor portable fireplace units. The following per unit cost information is available: direct materials $23, direct labor $27, variable manufacturing overhead $21, fixed manufacturing overhead $21, variable selling and administrative expenses $5, and fixed selling and administrative expenses $14. The company's ROI per unit is $22.

Collapse question part (a)

Compute Rap Corporation’s markup percentage using absorption-cost pricing. (Round answer to 2 decimal places, e.g. 10.50.) Absorption-cost pricing markup percentage %

Expand question part (b)

The parts of this question must be completed in order. This part will be available when you complete the part above.

Explanation / Answer

The calculation of absorption pricing for an individual unit is to divide total overheads and administration cost by the number of units produced , and add results to the variable cost per unit . In the above question we have all the cost per unit given hence no question of dividing with no. Of units produced.

Mark up percentage using absorption pricing can be calculated as below :

Direct Material $23

Direct labour $27

Variable manufacturing overheads $21

Fixed Manufcturing overheads $21

Variable selling and administrative expenses $05

Fixed selling and administrative expenses $14

Total cost per unit (A) $111

Company's ROI (B) $22

Mark up (A-B) $89

Hence mark up % ($89/$111) 80.18%

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.