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It is expected that the factory will be able to produce and sell 80,000 window units per year although, in the first year, because of the need to ‘run in’ the machinery and its new
workforce, output is only expected to be 50,000 window units. Each window is likely to be sold for €750, a price that represents a 150% mark-up on cash production costs.In the answer, to find production cost they divided the total revenue (50,000*750)/2.5 although the mark up is only 150%.
Could you please let me know why they did that?0.4 X 2.5 = 1
300 X 2.5 = 750
750/2.5 = 300
Think your difficulty may have to do with difference between markup and margin.
Above is badly expressed by hopefully you get the idea.
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