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Goshawks Co. produces an automotive product and incurs total manufacturing costs of $2,600,000 in the production of 80,000 units. The company desires to earn a profit equal to a 12% rate of return on assets of $960,000. Total selling and administrative expenses are $105,000. a. Calculate the markup percentage, using the product cost concept. Round your answer to one decimal place. % b. Compute the selling price per unit of the automotive product. Round your answer to two decimal places. $

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tanseershar

Answer:

The answer is given below;

Explanation:

Sales      ($2,600,000+$220,200) $2,820,200

Manufacturing Costs          $2,600,000

Gross Profit (105,000+115,200) $220,200

Selling and Admin Expenses $105,000

Operating Income ($960,000*12%) $115,200

We have worked out gross profit and sales through reverse method as we are given operating income % which is worked out from return on assets formula.

a.  Markup % =$220,200/2,600,000=8.5%

b. selling price per unit=Total sales/No. of units =$2,820,200/80,000=$35.25

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