What the markup percentage for setting prices

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Problem 1 - Wilde Corporation budgeted the following costs for the production of its one and only product for the next fiscal? year:

Direct materials ?$1,150,000

Direct labor ?775,000

Manufacturing overhead

Variable ?850,000

Fixed ?670,000

Selling and administrative

Variable ?410,000

Fixed ?490,000

Total costs ?$4,345,000

Wilde has an annual target operating income of? $920,000.

Required - What the markup percentage for setting prices as a percentage of variable manufacturing costs?

Problem 2 - Twenty? Technologies, currently sells? 17" monitors for? $280. It has costs of? $220. A competitor is bringing a new? 17" monitor to market that will sell for? $230. Management believes it must lower the price to? $230 to compete in the market for? 17" monitors. Twenty Technologies believes that the new price will cause sales to increase by? 10%, even with a new competitor in the market. Twenty? Technologies' sales are currently? 5,100 monitors per year.

Required - What is the target cost if the target operating income is? 25% of? sales?

Reference no: EM133118004

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