Sharapova Industries Budgeted the Following Costs for the Production of Its

question 6

Multiple Choice

Sharapova Industries budgeted the following costs for the production of its one and only product, tennis balls, for the next fiscal year: $$\begin{array} { l r } \text { Materials } & \$ 35,000 \\\text { Labor } & 25,000 \\\text { Overhead: } & \\\text { Variable } & 30,000 \\\text { Fixed } & 15,000 \\\text { Selling and administrative: } & \\\text { Variable } & 7,500 \\\text { Fixed } & \underline { 12,500 } \\\text { Total costs } & \$ 125,000\end{array}$$ Sharapova Industries has a target profit of $50,000.The average target markup for setting prices as a percentage of variable production costs would be _____.

• A)158%
• B)94%
• C)69%
• D)24%

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Definitions:

Expected Sales

Projections or forecasts of the amount of goods or services a company plans to sell over a certain period, often used in budgeting and planning.

Stockouts

Situations where items are unavailable for sale or use due to insufficient inventory levels.

Budgeted Sales

It represents the expected amount of sales as planned for a future period, influenced by factors like past sales, market trends, and marketing strategies.

Master Budget

A comprehensive financial planning document that includes all of a company’s budgets and financial plans, consolidating them into an overall budget.