Accounting Chapter 15 Homework Markup Price Selling Price Less 20 Markup

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DATA INPUT

Market Price 585$

Markup 25%

Direct Material 90$

Direct Labor 225$

Manufacturing overhead 150$

Selling and Admin Expenses 75$

SOLUTION

The current selling price is 675$

Leno’s markup is 135$ which is 20%

of the current selling price

675$ ($135/$675)

To achieve a 20% markup on a 585$ selling price the company must reduce its costs

Markup as % of Price 20%

Selling Price 585.00$

Less 20% Markup ($585*20%) 117.00$

Target cost 468.00$

Current cost 540.00$

Less: Target Cost 468.00$

Direct Material 90$

Direct Labor 225$

Manufacturing overhead 150$

Selling and Administrative Costs 75$

Total Cost 540$

Selling Price 675$