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29 January, 12:53

Strawberry Mansion Company sells its special strawberry pie for $18. The total cost to produce the pie is $10. Of this amount, $2 per unit is selling costs. The total variable cost is $7. The desired profit is $8 per unit. What is the markup percentage on product cost?

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  1. 29 January, 14:51
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    Product cost: $

    Variable production cost 5.00

    Variable selling cost 2.00

    Total variable cost 7.00

    Total fixed cost 3.00

    Total cost 10.00

    Desired profit 8.00

    Selling price 18.00

    Mark-up percentage on product cost

    = 8 x 100

    10

    = 80%

    Explanation:

    In this case, we will divide the profit by the total cost in order to obtain the mark-up percentage on cost. The total cost equals $10 while the profit is $8. The division of profit by total cost multiplied by 100 gives the mark-up percentage on product cost.
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