Question

Silco Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computersin January 2008. Current plans call for the production and sale of 1000 computers with estimated production costs asfollows. The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return oninvestment for the line is 18 per cent. What is the mark-up percentage if the company uses cost-plus pricing based ontotal variable cost?                (2 marks)

Variable costs
Manufacturing	$        450 000
Selling and administrative	$        100 000
Total variable costs	$        550 000
Fixed costs:Manufacturing	$        300 000
Selling and administrative	$        180 000
Total fixed costs	$        480 000
Total costs:	$      1 030 000