Accounting question please help. See attached.
Accounting question please help. See attached.
ATTACHMENT PREVIEW
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PROBLEM #3
Patty Corporation has predicted the following costs for the year for based upon 100,000 units of
product.
Manufacturing
Selling & Administrative
Variable
$ 1,600,000
$
600,000
Fixed
2,400,000
1,200,000
Total
$ 4,000,000
$
1,800,000
A.
Calculate the markup percentage on variable manufacturing costs to achieve a profit of
$200,000.
Calculate the unit selling price needed to obtain this target profit.
B.
Calculate the markup percentage on manufacturing costs to obtain a profit of $200,000.
Calculate the unit selling price needed to obtain this target profit.
C.
Which one of the above (A or B) results in less risk for Patty Corporation? Explain your
choice.
