Computing Various Average Markup Percentages
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Nancy 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
Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product
Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product
Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs
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Solution Summary
Given a contribution margin income statement, this solution illustrates how to (a) compute the average markup percentage for setting prices as a percentage of the full cost of the product, (b) compute the average markup percentage for setting prices as a percentage of the variable cost of the product, and (c) compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs.
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