Pauley Company Needs to Determine a Markup for a New

question 18

Multiple Choice

Pauley Company needs to determine a markup for a new product.Pauley expects to sell 15,000 units and wants a target profit of $22 per unit.Additional information is as follows: $$\begin{array} { l r } \text { Variable product cost per unit } & \$ 19 \\\text { Variable administrative cost per unit } & 11 \\\text { Total fixed overhead } & 13,500 \\\text { Total fixed administrative } & 21,000\end{array}$$ Using the variable cost method,what markup percentage to variable cost should be used?

• A)71%
• B)76%
• C)92%
• D)81%
• E)80%

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Definitions:

Uncertainty

A situation where the outcomes or conditions of an event, effect, or decision are not known or predictable.

Conditional Probability

This is the probability of an event occurring given that another event has already occurred.

Expected Value

A statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen, often used in decision-making and risk assessment.

Outcome

The result or consequence of an action, process, or situation, typically measured against expected or intended objectives.