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Calculate markup percentage on variable manufacturing costs

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PROBLEM - Patty Corporation has predicted the following costs for the year for based upon 100,000 units of product.

                        Manufacturing           Selling & Administrative

Variable             $1,600,000                 $600,000

Fixed                  2,400,000                 1,200,000

Total                $4,000,000                  $1,800,000

A. Calculate the markup percentage on variable manufacturing costs to achieve a profit of $200,000. Calculate the unit selling price needed to obtain this target profit.

B. Calculate the markup percentage on manufacturing costs to obtain a profit of $200,000. Calculate the unit selling price needed to obtain this target profit.

C. Which one of the above (A or B) results in less risk for Patty Corporation? Explain your choice.

Reference no: EM131918487

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