32) Sarker manufacturing company produces and sells 40,000 units of a single product. Variable costs total $80,000 and fixed costs total $120,000. If each unit is sold for $8, what markup percentage is the company using?
To determine the markup percentage, first, let's calculate the total cost per unit:
Total cost per unit = (Variable costs + Fixed costs) / Number of units
Variable costs = $80,000
Fixed costs = $120,000
Number of units = 40,000
Total cost per unit = ($80,000 + $120,000) / 40,000
Now we can find the total cost per unit:
Total cost per unit = $200,000 / 40,000
Total cost per unit = $5
To calculate the markup percentage, we need to find the difference between the selling price and the cost per unit, and then divide it by the cost per unit:
Markup per unit = Selling price - Cost per unit
Markup per unit = $8 - $5
Markup per unit = $3
Markup percentage = (Markup per unit / Cost per unit) * 100
Markup percentage = ($3 / $5) * 100
Markup percentage ≈ 60%
Therefore, the company is using a markup percentage of approximately 60%.