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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Calculating Price by Applying a Markup Percentage to Cost

Enviro Consulting Firm provides various environmental consulting services to organizations. Enviro has decided to price its jobs at the total direct variable costs of the job plus 10%. The job for a new client included the following costs:

Chapter 8, Problem 34BEB, Calculating Price by Applying a Markup Percentage to Cost Enviro Consulting Firm provides various

Required:

Calculate the price charged by Enviro Consulting Firm to its new client.

To determine

Compute the amount charged by Company E to the client.

Explanation

Markup Percentage:

The percentage that is applied to the cost of any product or service is known as the markup percentage. The price using markup can be evaluated by adding the desired profit to the cost of any product or service.

Use the following formula to calculate the amount of price charged by Company E:

Price charged=Cost of consulting services1+(Cost of consulting services×Markup percentage)

Substitute $750,000 for the cost of consulting services and 10% for the markup percentage in the above formula.

Price charged=$750,000+($750,

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