42 Copyright O 2014 Pearson Education, Inc 6) Brankov Company has budgeted sales

Question

42 Copyright O 2014 Pearson Education, Inc 6) Brankov Company has budgeted sales of $30,000 with the following budgeted costs Direct materials Direct labor Variable factory overhead Fixed factory overhead Variable selling and administrative costs Fixed selling and administrative costs $6,300 $4.100 $3.700 $3,200 What is the average target markup percentage for setting prices as a percentage of variable manufacturing costs? A) 53% B) 76% C) 113% D) none of the above newer C Diff: 2 AACSB: Analytic skills Learning Outcome: None 7) Butters Company has budgeted sales of $30,000 with the folowing budgeted costs: Direct materials Direct labor Variable factory overhead Fixed factory overhead Variable selling and administrative costs Fixed selling and administrative costs $6,300 $4.100 $3,700 $5,600 $2,400 $3,200 What is the average target markup percentage for setting prices as a percentage of total manufacturing costs? A) 34% B) 52% C) 61% D) none of the above Answer: B Diff: 2 LO: 5-7 AACSB: Analytic skills Learning Outcome: None Copyright2014 Pearson Education, Inc.

Explanation / Answer

Answer is C. 113% Explanation: Sales 30000 Variable Manufacturing cost: Material 6300 Labour 4100 Factory overheads 3700 14100 Markup required 15900 % of markup on variable MFG cost: 15900/14100*100 =112.77% Answer is B. 52% Explanation: Sales 30000 Manufacturing cost Material 6300 Labour 4100 Factory overheads 9300 19700 Markup required 10300 % of Markup over Mfg cost: 10300 /19700 *100 = 52.3%

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