Chapter 8, Problem 8.19E

Rap Corporation produces outdoor portable fireplace units. The following per unit cost information is available: direct materials $20, direct labor $25, variable manufacturing overhead $14, fixed manufacturing overhead $21, variable selling and administrative expenses $9, and fixed selling and administrative expenses $11. The company’s ROI per unit is $24.

Instructions

Compute Rap Corporation’s markup percentage using (a) absorption-cost pricing and (b) variable-cost pricing.