Question

In: Accounting

Kristopher Company has budgeted sales of $300,000 with the following budgeted costs:       Direct materials                    &nb

Kristopher Company has budgeted sales of $300,000 with the following budgeted costs:

      Direct materials                                       $60,000

      Direct manufacturing labor                       40,000

      Factory overhead

            Variable                                               30,000

            Fixed                                                    50,000

      Selling and administrative expenses

            Variable                                               20,000

            Fixed                                                    30,000

      Required (10 points):

           

Compute the average markup percentage for setting prices as a percentage of:

                       

  1. The full cost of the product
  2. The variable cost of the product
  3. Variable manufacturing costs
  4. Total manufacturing costs

Solutions

Expert Solution

Compute the average markup percentage for setting prices as a percentage of:

a. Full cost = Direct material +direct labor + Variable Factory overhead + Fixed factory overhead + Variable selling and administrative expenses + Fixed selling and administrative expenses

= $60,000 + $40,000 + $30,000 + $50,000 + $20,000 + $30,000

= $230,000

Profit = Sales - full cost

= $300,000 - $230,000

= $70,000

Mark up percentage on full cost = Profit / Full cost

= $70,000 / $230,000

= 30.43%

b Variable cost = Direct material + direct labor + Variable Factory overhead + Variable selling and administrative expenses

= $60,000 + $40,000 + $30,000 + $20,000

= $150,000

Markup percentage on variable cost = Profit / Variable cost

= $70,000 / $150,000

= 46.67%

c. Variable manufacturing costs = Direct material + direct labor + Variable Factory overhead

= $60,000 + $40,000 + $30,000

= $130,000

Markup percentage on Variable manufacturing costs = Profit / Variable manufacturing costs

= $70,000 / $130,000

= 53.85%

d. Total manufacturing cost = Direct material + direct labor + Variable factory overhead + Fixed factory overhead

= $60,000 + $40,000 + $30,000 + $50,000

= $180,000

Markup percentage on total manufacturing cost = Profit / total manufacturing costs

= $70,000 / $180,000

= 38.89%

ekkarill92 answered 7 months ago
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