Maggie CoHas Variable Manufacturing Costs Per Unit of $20, and Fixed

question 21

Multiple Choice

Maggie Co.has variable manufacturing costs per unit of $20, and fixed manufacturing cost per unit is $15.Variable selling and administrative costs per unit are $4, while fixed selling and administrative costs per unit $6.Maggie desires an ROI of $7.50 per unit.If Maggie Co.uses the absorption-cost approach, what is its markup percentage?

• A)8.33%
• B)50%
• C)16.67%
• D)25%

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Definitions:

Direct Method

The direct method in cost accounting allocates service department costs directly to producing departments without attempting to apportion them among service departments.

First-In, First-Out Method

An inventory valuation method where the earliest items purchased or produced are the first to be sold, affecting the cost of goods sold and inventory valuation.

Costs Accounted For

Total costs that have been recognized and recorded within a specific accounting period.

Ending Work in Process Inventory

The value of partially completed goods at the end of an accounting period.