AST Electrical provides the following cost information related to its production of electronic circuit boards. Per Unit Variable manufacturing cost $40 Fixed manufacturing cost $30 Variable selling and administrative expenses $ 8 Fixed selling and administrative expenses $12 Desired ROI per unit $15 What is its markup percentage assuming that AST Electrical uses absorption- cost pricing? 16.67%. 54.28%. 50%. 118.75%.

In accounting and managerial cost work the amount that is equal to the difference in selling and cost price of a product is called markup percentage.

The formula of markup percentage is :

The markup percentage is:

Option C. 50%

The markup percentage can be estimated as:

Given,

To achieve the desired ROI:

Markup percentage can be calculated as:

Therefore, 50% of the markup percentage is used.

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50%

Explanation:

The computation of markup percentage is shown below:-

Unit Product Cost as per absorption Costing = Variable Manufacturing cost + Fixed manufacturing cost

= $40 + $30

= $70

Mark up needed to achieve Desired ROI per unit = Variable selling and administrative expenses +  Fixed selling and administrative expenses + Desired ROI per unit

= $8 + $12 + $15

= $35

Mark up percentage = Mark up needed ÷ Unit Product Cost as per absorption Costing

= $35 ÷ $70

= 50%

So, for computing the markup percentage we simply applied the above formula.