BuyFindarrow_forward

Managerial Accounting: The Corners...

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

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
54 views

Cost-Based Pricing Decision

Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year’s income statement is as follows:

Chapter 8, Problem 61P, Cost-Based Pricing Decision Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job

Required:

  1. 1. Calculate the markup that Jeremy will use.
  2. 2. What is Jeremy’s initial bid price?

1.

To determine

Compute the markup that will be used by Person J.

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 markup percentage:

Markup percentage=(SalesCost of goods sold)Cost of goods sold×100

Substitute $130,000 for sales and $48,100 for the cost of goods sold in the above formula

2.

To determine

Calculate the initial bid price.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

In general, an employee is entitled to withholding allowances for what purposes?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

It is often useful to perform a sensitivity analysis, where you show how your estimate of intrinsic value varie...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is the bullwhip effect?

Pkg Acc Infor Systems MS VISIO CD