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Markup percentage based on manufacturing cost The markup percentage based on manufacturing cost will need to be 25 % 20%.

Markup percentage based on manufacturing cost The markup percentage based on manufacturing cost will need to be 25 % 20%.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Current Attempt in Progress Your answer is partially correct. For John, setting prices has always been a clear-cut process: tell him the costs and he'll tell you at what price to sell it. Amazingly, his approach has worked flawlessly so far. John's manufacturing costs run $5.00 per unit, and his selling and administrative costs are $2.00 per unit. To date, he has used a markup of 20% on full cost, but he is thinking about changing his selling and administrative situation significantly, which will make those costs more difficult to estimate. If John wants to use a new markup percentage based on just manufacturing cost, will that markup percentage need to be higher or lower than 20% to generate a comparable profit? (Round answer to O decimal places, e.g. 15%.) Markup percentage based on manufacturing cost The markup percentage based on manufacturing cost will need to be 25 % higher than 20%.
Transcribed Image Text:Current Attempt in Progress Your answer is partially correct. For John, setting prices has always been a clear-cut process: tell him the costs and he'll tell you at what price to sell it. Amazingly, his approach has worked flawlessly so far. John's manufacturing costs run $5.00 per unit, and his selling and administrative costs are $2.00 per unit. To date, he has used a markup of 20% on full cost, but he is thinking about changing his selling and administrative situation significantly, which will make those costs more difficult to estimate. If John wants to use a new markup percentage based on just manufacturing cost, will that markup percentage need to be higher or lower than 20% to generate a comparable profit? (Round answer to O decimal places, e.g. 15%.) Markup percentage based on manufacturing cost The markup percentage based on manufacturing cost will need to be 25 % higher than 20%.
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