Use This Information for Magpie Corporation to Answer the Questions

question 163

Multiple Choice

Use this information for Magpie Corporation to answer the questions that follow.
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Magpie Corporation uses the total cost concept of product pricing. Below is the cost information for the production and sale of 60,000 units of its sole product. Magpie desires a profit equal to a 25% rate of return on invested assets of $700,000.
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$$\begin{array} { l r } \text { Fixed factory overhead cost } & \$ 38,700 \\\text { Fixed selling and administrative costs } & 7,500 \\\text { Variable direct materials cost per unit } & 4.60 \\\text { Variable direct labor cost per unit } & 1.88 \\\text { Variable factory overhead cost per unit } & 1.13 \\\text { Variable selling and administrative cost per unit } & 4.50\end{array}$$
-The markup percentage on the total cost of the company's product is

• A) 21.0%
• B) 22.6%
• C) 15.8%
• D) 24.0%

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Definitions:

Snake River Plain

A geographic feature in the U.S. characterized by a wide, flat valley cutting through Idaho, known for its volcanic geology.

Groundwater

Water that is located beneath the earth's surface in soil pore spaces and in the fractures of rock formations.

Huge Springs

Large natural outlets where groundwater flows out of the ground, often the result of an aquifer being filled to the point that the water overflows onto the land surface.

Hydrologic Cycle

The continuous movement of water on, above, and below the surface of the Earth, including processes such as evaporation, precipitation, and runoff.