It Costs a Company $6 to Manufacture a Product

question 18

Multiple Choice

It costs a company $6 to manufacture a product. It sells the product for $10 to a wholesaler who in turn sells it to a retailer for $12. A customer of the retailer buys it for $24. What was the markup on selling price for each member of this product's channel of distribution?

• A) Manufacturer's markup = 40 percent; wholesaler's markup = 16.67 percent; retailer's markup = 50 percent
• B) Manufacturer's markup = 48 percent; wholesaler's markup = 18 percent; retailer's markup = 45 percent
• C) Manufacturer's markup = 60 percent; wholesaler's markup = 20 percent; retailer's markup = 100 percent
• D) Manufacturer's markup = 66.67 percent; wholesaler's markup = 20 percent; retailer's markup = 100 percent
• E) Manufacturer's markup = 60 percent; wholesaler's markup = 23 percent; retailer's markup = 40 percent

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Definitions:

Investment Requirement

The minimum amount of money needed to invest in a particular venture, fund, or project.

Financial Plan

A comprehensive evaluation of an individual's or organization's current and future financial state by using currently known variables to predict future income, asset values, and withdrawal plans.

Forecast The Future

The practice of making predictions based on current and historical information, often using statistical models and analysis.

Depreciation Expense

The deliberate partitioning of the expenditure for a solid asset over its period of utility.