2. Funtastic Furniture Ltd is planning to introduce executive desks as a new line of...
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2. Funtastic Furniture Ltd is planning to introduce executive desks as a new line of furniture in January 2018. Funtastic budgeted the following costs for the production of executive desks in 2018: Manufacturing costs: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead $250,000 180,000 80,000 $120,000 $630,000 Total manufacturing costs Selling and administrative expenses: $100,000 $90,000 $190,000 Variable Fixed Total selling and admin expenses Total costs $820,000 The average amount of capital invested in the executive desk is $2,400,000 and Funtastic's target return on investment for the line is 18 per cent. What is the expected mark-up percentage (rounded) if the company uses a cost-plus pricing based on total variable cost method? a, 22% b. 34% C. 496% d. 618% e. 105%
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