A Sweater Sells for $130

question 79

Short Answer

A sweater sells for $130.50. Overhead expenses are 25% of cost and operating profit is 20% of cost. What rate of markdown will price the sweater at the break-even price?

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output, including expenses such as factory rent, salaries of manufacturing personnel, and property taxes on manufacturing facilities.

Direct Labor Variances

The differences between the actual costs of labor and the standard or expected costs, used to assess how effectively labor resources are used.

Direct Labor

Direct labor costs are the wages paid to workers directly involved in the production of goods or services. These costs are directly traceable to the cost object, such as a product unit.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost, which can indicate changes in materials prices or sourcing efficiency.