QQuestionAnatomy and Physiology
QuestionAnatomy and Physiology
Companies must always examine their pricing $\qquad$ .
| | A) based on the supply of the product |
| --- | --- |
| | B) based on the full cost of producing the product and price to make a profit |
| | C) through the eyes of their customers and then manage costs to produce a profit |
| | D) based on the GAAP cost of producing the product and then add a mark-up |
Crimpson Company has invested $\$ 2,200,000$ in a plant to make commercial juicer machines. The target operating income desired from the plant is $\$ 303,000$ annually. The company plans annual sales of 7000 juicer machines at a selling price of $\$ 500$ each. What is the markup percentage as a percentage of cost for Crimson Company?
| | A) $8.7 \%$ |
| --- | --- |
| | B) $13.8 \%$ |
| | C) $9.5 \%$ |
| | D) $0.9 \%$ |
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Step 1: Determine the total cost price of the juicer machines.
Cost~price = \frac{Total~investment}{Number~of~units} = \frac{2,200,000}{7000} = 314.29 ~dollars
The total investment in the plant is $2,200,000 dollars, and the company plans to sell 7000 juicer machines. Thus, the cost price per unit is:
Step 2: Calculate the markup per unit.
Markup~per~unit = Selling~price - Cost~price = 500 - 314.29 = 185.71 ~dollars
So, the markup per unit is:
Final Answer
The markup percentage as a percentage of cost for Crimson Company is approximately $59.09 \%$, not listed among the options.
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