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During the current year, Chudrick Corporation expects to produce 9,000 units and has budgeted the following: net income $378,000, variable costs $1,156,000, and fixed costs $104,000. It has invested assets of $1,890,000. The company’s budgeted ROI was 20%. What was its budgeted markup percentage using a full-cost approach?

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Answer:

Mark-up= 30%

Explanation:

Mark-up is profit expressed as a percentage of the total production cost.

Full cost per unit = (Variable cost + Fixed cost)/No of units

Full cost per unit = (1,156,000 + 104,000)/9000= 140 per unit

Profit per unit = Net income / No of units

=378,000/9,000

= $42 per unit

Mark-up  = profit per unit/cost per unit    

  = 42/140 × 100

   = 30%