5

Pauley Company needs to determine a markup for a new product. Pauley expects to sell 15,000 units and wants a target profit of $24 per unit. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 9	Overhead	$ 20,500
Direct labor	10	General and administrative	27,500
Overhead	3
General and administrative	12

Using the variable cost method, what markup percentage to variable cost should be used?

6.

Wesley Company makes bowling balls and uses the total cost method in setting product prices. Its costs for producing 10,000 bowling balls follow. The company targets a 12.5% markup on total cost. The dollar markup per unit is:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 55	Overhead	$ 230,000
Direct labor	13.00	Selling, general, and administrative	210,000
Overhead	15.00
Selling, general, and administrative	3.00