Question

Firefly Corporation produces outdoor portable fireplace units. The following cost information per unit is available: direct materials $22, direct labour $13, variable manufacturing overhead $16, fixed manufacturing overhead $24, variable selling and administrative expenses $9, and fixed selling and administrative expenses $15. The company’s ROI per unit is $18.

Question 6 Firefly Corporation produces outdoor portable fireplace units. The following cost information per unit is available: direct materials $22, direct labour $13, variable manufacturing overhead $16, fixed manufacturing overhead $24, variable selling and administrative expenses $9, and fixed selling and administrative expenses $15. The company's ROI per unit is $18. (a) x Your answer is incorrect. Try again. Calculate Firefly Corporation's markup percentage using absorption-cost pricing. (Round answer to 2 decimal places, e.g. 15.25%.) x 17.65 17.65/ Markup percentage

Answer 1

Solution :- Calculation of Firefly Corporation Markup percentage using absorption-cost pricing :-

Calculation of Firefly Corporation Total cost per unit using absorption costing :-

Direct materials	$ 22
Direct labour	$ 13
Variable manufacturing overhead	$ 16
Fixed manufacturing overhead (W Note 1)	$ 24
Variable selling and administrative expenses	$ 9
Fixed selling and administrative expenses (W Note 1)	$ 15
Total Unit Cost	$ 99

Markup Percentage = ROI per unit/ Total Unit Cost

ROI Per Unit = $ 18 per Unit [Given]

Therefore, Markup Percentage = $ 18 /$ 99 *100 = 18.18%

W Note 1 : Since Firefly corporation uses absorption costing , therefore Fixed manufacturing overhead and Fixed selling and administrative expenses will also form part of total Unit Cost.