Ivanhoe Motors expects to produce 10000 motors during the upcoming year. It has budgeted for the following: net income of $197000; variable costs of $509000; and fixed costs of $315000. The company has invested assets of $1000000 and a budgeted return on investment (ROI) of 20.60%. What is the budgeted markup percentage used in pricing each motor using a cost-plus method of pricing?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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