Red CoUses the Product Cost Concept of Applying the Cost-Plus Approach

question 78

Multiple Choice

Red Co.uses the product cost concept of applying the cost-plus approach to product pricing.Below is cost information for the production and sale of 40,000 units of its sole product.Red Co.desires a profit equal to a 15% rate of return on invested assets of $1,200,000. $$\begin{array} { l r } \text { Fixed factory overhead cost } & \$ 80,000.00 \\\text { Fixed selling and administrative costs } & 140,000.00 \\\text { Variable direct materials cost per unit } & 7.00 \\\text { Variable direct labor cost per unit } & 11.00 \\\text { Variable factory overhead cost per unit } & 3.00 \\\text { Variable selling and administrative cost per unit } & 2.00\end{array}$$ ? What is the markup percentage for the company's product? (Round the answer to two decimal places.)

• A) 30.30%
• B) 43.50%
• C) 40.00%
• D) 35.60%

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