Markup on Cost, Job Pricing

Privacy Window and Wall Treatments Company provides draperies, shades, and various window treatments. Privacy works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Privacy's income statement for last year is as follows:

Revenues			$1,000,000
Cost of goods sold:
Direct materials	$350,000
Direct labor	2,00,000
Overhead	250,000		800,000
Gross profit			$ 200,000
Selling and administrative expenses			150,000
Operating income			$50,000

Privacy wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year.

Required:

1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? (Round to the nearest whole percent. Use this amount for future calculations.) fill in the blank 1 % of cost of goods sold

2. A customer orders draperies and shades for a remodeling job. The job will have the following costs:

Direct materials	$7,000
Direct labor	2,000
Applied overhead	3,000
Total cost	$12,000

What is the price that Privacy will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.) $fill in the blank 2

3. What if Privacy wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? (Round to the nearest whole percent. Use this amount for future calculations.) fill in the blank 3 % of direct materials cost

What is the bid price Privacy will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.) $fill in the blank 4