The following data pertain to Arctic Company's commercial snow thrower:Variable manufacturing cost$400Applied fixed manufacturing cost160Variable selling and administrative cost60Allocated fixed selling and administrative cost25Required:For each of the following cost bases, determine the appropriate percentage markup that will result in a price of $980 for the snow thrower. (Round percentages to nearest one-hundredth of a percent.)A. Variable manufacturing cost.B. Absorption manufacturing cost.C. Total cost.D. Total variable cost.
What will be an ideal response?
| A. | Variable manufacturing cost per unit | $400 |
| ? | Markup ($400 × 145%) | 580 |
| ? | Price | $980 |
| ? | ? | ? |
| B. | Absorption manufacturing cost ($400 + $160) | $560 |
| ? | Markup ($560 × 75%) | 420 |
| ? | Price | $980 |
| ? | ? | ? |
| C. | Total cost ($400 + $160 + $60 + $25) | $645 |
| ? | Markup ($645 × 51.94%) | 335 |
| ? | Price | $980 |
| ? | ? | ? |
| D. | Total variable cost ($400 + $60) | $460 |
| ? | Markup ($460 × 113.04%) | 520 |
| ? | Price | $980 |
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