A manufacturing company has fixed costs of $120,000 per month and variable costs

Question

A manufacturing company has fixed costs of $120,000 per month and variable costs of $6 per unit. Determine the break even quantity for each of these price points.

$7

$8

$10

$12

Determine the markup as a percentage of the selling price when the cost is $7 and the selling price is $10.

Determine the markup as a percentage of cost when the cost is $7 and the selling price is $10.

Determine the selling price when the cost is $12 and the % markup on cost is 25%.

Determine the cost when the selling price is $20 and the % markup on cost is 30%.

Explanation / Answer

Break even Quantity is Fixed Costs/Cont per unit When SP is $7 BEP = 120000/(7-6) BEP = 120,000 Units When SP is $8 BEP = 120000/(8-6) BEP = 60,000 Units When SP is $10 BEP = 120000/(10-6) BEP = 30,000 Units When SP is $12 BEP = 120000/(12-6) BEP = 20,000 Units Markup = 10- 7 = 3 markup as % of SP =3/10 = 30% markup as % of cost =3/7 = 42.86% cost                 12.00 Mark up on cost 25% Mark up = 12*25%                    3.00 Selling price =12+3 = $15 Selling price                 20.00 Mark up on cost 30% SP = Cost + %markup on cost Let cost be x 20 = x + .30x x= 20/1.3 = $15.38 Approx

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