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Dear Sir, I need help with this:-
I tried and got the wrong answer. After looking at the BPP answer I could not understand the workings
H Co uses marginal cost plus pricing to determine selling price of Product X
Direct Material = $12
Direct Labour = $5
Variable Overheads = $3
Fixed OH = $40Fixed OH are $20,000 per year. Budgeted output and sales for the year are 500 units and this should be sufficient to break-even.
What profit mark-up to add to marginal cost to allow H Co to break even?
Appreciate your help sir 🙂
For breakeven the contribution needs to be 20,000/500 = $40 per unit.
The marginal cost is $20 per unit.
Therefore the mark-up has to be 40/20 = 200%
Dear Sir,
Thank you for the explanation. I have understood your way of explaining more than ever
Have a nice day ahead
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