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Magna Lighting Inc. produces and sells lighting fixtures. An entry light has a total cost of $125 per unit, of which $80 is product cost and $45 is selling and administrative expenses. In addition, the total cost of $125 is made up of $90 variable cost and $35 fixed cost. The desired profit is $55 per unit. Determine the markup percentage on product cost.

Respuesta :

Cricetus

Answer:

The correct solution is "125%".

Explanation:

Given:

Desired profit,

= $55

Selling and administrative expenses,

= $45

Product cost,

= $80

Now,

The markup percentage will be:

= [tex]\frac{Desired \ profit+Selling \ and \ administrative \ expenses}{Product \ cost}\times 100[/tex]

By putting the values, we get

= [tex]\frac{55+45}{80}\times 100[/tex]

= [tex]\frac{100}{80}\times 100[/tex]

= [tex]125[/tex] (%)

125% is the markup percentage on product cost.

Markup

It is important to remember that markup is a term used to refer to the difference between the selling price of a product and cost.

Solution

Using the formula

Desired profit + Selling and administrative expenses/product cost X 100

  • Desired profit = $55
  • Selling and administrative expenses = $45
  • product cost = $80

55+45/80 = 1.25

1.25* 100= 125

= 125%

You can learn more about markup percentage here https://brainly.com/question/19104371

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