   Chapter 25, Problem 25.7APE

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Section
Textbook Problem

Product cost markup percentageLight force Inc. produces and sells lighting fixtures. An entry light has a total cost of $180 per unit, of which$100 is product cost and $80 is selling and administrative expenses. In addition, the total cost of$180 is made up of $110 variable cost and$70 fixed cost. The desired profit is $45 per unit Determine the markup percentage on product cost. To determine Product cost pricing: Product cost pricing is a pricing technique which sums up the costs involved in the production of the product alone and the markup is added to the sum. Markup Percentage: The markup percentage is the percentage of additional costs added to the product cost to get the selling price of the product. Markup Percentage = (DesiredProfit) + (Total Selling andAdmininstrative Expenses)Total Product Cost To Determine: The markup percentage on the product cost for Company LF. Explanation The Company LF produces lighting fixtures and sells at$180 per unit. $100 is the Total Product Cost per unit and$80 is the Total Selling and Administrative expenses per unit...

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