Kendrick Corporation Sells a Single Product

question 4

Essay

Kendrick Corporation sells a single product. The following information relates to the year just ended:
Number of units sold: 20,000
Variable cost per unit: $300
Total fixed cost: $3,000,000
Operating income: $4,200,000
Required:
A. Compute the company's selling price.
B. Compute the percentage markup on total cost. Round your answer to two decimal places.
C. Assume that Kendrick desired to change its practice of computing a markup on total cost to a markup on variable cost. If the Company wants to hold selling price constant, would the markup percentage increase or decrease? By how much?

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Definitions:

Surplus Agricultural Labor

A condition in agricultural economies where there are more laborers available than are needed to cultivate the land, often leading to unemployment or underemployment in rural areas.

Developing Nation

A country with a lower level of industrialization, lower living standards, and lower Human Development Index (HDI) compared to developed nations.

Underemployment

Underemployment refers to situations where workers are employed below their capacity, either through part-time jobs when they seek full-time employment or in positions that underutilize their skills.

Labor Resources

The available human workforce; the people available for work and their skills, which are vital for the production of goods and services.