Assume a Product Costs $3 and a Retailer Sells It

question 19

Multiple Choice

Assume a product costs $3 and a retailer sells it for $6. What is the percentage markup on selling price and cost?

• A) Markup on selling price = 33%; Markup on cost = 50%
• B) Markup on selling price = 40%; Markup on cost = 66.6%
• C) Markup on selling price = 50%; Markup on cost = 100%
• D) Markup on selling price = 100%; Markup on cost = 100%
• E) Markup on selling price = 120%; Markup on cost = 150%

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Definitions:

Traditional Costing

A costing methodology that allocates overhead costs based on a single, volume-based cost driver, often used in less complex manufacturing environments.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities related to production.

Production Orders

Instructions or commands produced to initiate the manufacture of a specific quantity of goods at a specified time.

Activity-Based Costing

A costing method that allocates overhead and indirect costs to specific activities, providing more accurate product costing.