Question

Crystal Lighting Inc. produces and sells lighting fixtures. An entry light has a total cost of $80 per unit, of which $54 is product cost and $26 is selling and administrative expenses. In addition, the total cost of $80 is made up of $40 variable cost and $40 fixed cost. The desired profit is $55 per unit. Determine the markup percentage on product cost.

Answer 1

Answer:

Mark-up = 101.9%

Explanation:

Mark up is the percentage of the product cost that is made as profit. It is profit expressed as a percentage of the product cost.

Mark-up = profit/product cost × 100

Mark-up =  $55/54 × 100 =101.85%

Mark-up = 101.9%

Answer 2

Answer:

Explanation:

Mark up percentage = [ (desired profit ) + (Total selling and administrative expenses) ] / total product cost

Desired profit = $55

Total selling and administrative expenses = $26

Total cost = $80

($55 + $26)/80 = 1.0125

1.0125 - 1 = 0.0125 = 1.25%

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