Sterling Co. manufactures phone equipment and uses the variable cost method of applying the cost-plus approach to product pricing. Sterling incurs variable costs of $1,900,000 in the production of 100,000 units, while fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10%return on invested assets. Compute a markup percentage based on variable cost.

Sterling Co. manufactures phone equipment and uses the variable cost method of applying the cost-plus approach to product pricing. Sterling incurs variable costs of $1,900,000 in the production of 100,000 units, while fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10%return on invested assets. Compute a markup percentage based on variable cost.

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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