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- This topic has 3 replies, 3 voices, and was last updated 5 months, 2 weeks ago by Ken Garrett.

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- September 3, 2019 at 6:43 am

sanjananandvaniMemberDirect mterial .3000

Direct labor…4000

production ov/h 50% of prime cost

non production ov/h 25%of total production cost.

profit margin 30%

calculate change in profit if zoobi co. decides to consider profit as 30% of total cost(markup)?my ans is 16875.5 decrease

but correct is 3281 increased

plz solve it….September 3, 2019 at 4:16 pm

sanjananandvaniMember@sanjananandvani said:

Direct mterial .3000

Direct labor…4000

production ov/h 50% of prime cost

non production ov/h 25%of total production cost.

profit margin 30%

calculate change in profit if zoobi co. decides to consider profit as 30% of total cost(markup)?my ans is 16875.5 decrease

but correct is 3281 increased

plz solve it….please do this favour..i really need your help..

September 14, 2019 at 7:36 am

sajid008MemberHello Everyone it is too simple LOOK!

D.M=3000

D.L=4000

=7000 PRIME COST

PRODUCTION OVERHEADS ARE 0.50% OF PRIME COST SO DO

7000*0.50=3500

3500

7000

=10500 PRODUCTION COST

NON-MANUFACTURING COST IS 0.25% OF TOTAL COST SO DO

10500*0.25=2625

2625+10500=13123

THIS {13123} IS COST

SO PROFIT IS 0.30% OF COST NOW

13123*0.30/130={{{{{{{{3028}}}}}}}}September 14, 2019 at 9:49 am

Ken GarrettKeymasterThe previous post is incorrect:

Prime cost = 3000 + 4000 = 7000

Add 50%, so 7000 x 1.5 = 10,500

Add 25%, 20 10,500 x.1.25 = 13125.Current profits: 30% profit margin ie profits are 30% of sales, so the ratios are:

Cost + Profit = Selling price

70 30 10013125

So profit is 13125 x 30/70 = 5,625

Under the 30% mark-up (ie profit is 30% of cost) the ratios are:

Cost + Profit = Selling price

100 30 130Profit would be 13,125 x 30% = 3,937.5

Profits would decrease by 5,625 – 3,937.5 = 1,687.5

Model answer is incorrect.

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