Shale Remodeling uses time and materials pricing. It reports the following information: Direct labor rate $ 125 per DLHNon-materials-related overhead $ 95 per DLHMaterials-related overhead 23% of direct materials costTarget profit margin (both conversion and direct materials) 20% The materials markup percentage is:
Question
Shale Remodeling uses time and materials pricing. It reports the following information: Direct labor rate 95 per DLHMaterials-related overhead 23% of direct materials costTarget profit margin (both conversion and direct materials) 20% The materials markup percentage is:
Solution
To calculate the materials markup percentage, we need to consider both the materials-related overhead and the target profit margin.
-
First, we know that the materials-related overhead is 23% of the direct materials cost. This means that for every dollar spent on materials, an additional $0.23 is spent on overhead related to those materials.
-
Next, we know that the target profit margin is 20%. This means that for every dollar of total cost (including both conversion and direct materials), the company wants to make a profit of $0.20.
-
To find the materials markup percentage, we need to add the materials-related overhead percentage to the target profit margin percentage.
So, the materials markup percentage is 23% (materials-related overhead) + 20% (target profit margin) = 43%.
Therefore, the materials markup percentage is 43%.
Similar Questions
An oil company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has decides to bid $112 million. The company estimates that it has a 60% chance of winning the contract with this bid. If the firm wins the contract, it can choose one of three methods for getting oil from the shale. It can develop a new method for oil extraction, use an existing (inefficient) process, or subcontract the processing to a number of smaller companies once the shale has been excavated. The cost of preparing the contract is $2 million. If the company does not make a bit, it will invest in an alternative venture with a guaranteed profit of $30 million. Use the following decision tree to answer the questions below. Flag question: Question 3Question 3Tips2.25 ptsWhat is the expected value at node 4? Flag question: Question 4Question 4Tips2.25 ptsWhat is the expected value of node 2? Flag question: Question 5Question 5Tips2.25 ptsShould the company make the bid?Group of answer choicesNot enough information provided.NoYes
Company produces pipes for concert-quality organs. Each job is unique. In April 2021, it completed all outstanding orders, and then, in May 2021, it worked on only two jobs, M1 and M2:Rafael Company, May 2021 Job M1 Job M2Direct materials $79,000 $56,000Direct manufacturing labour $277,000 $205,000Direct manufacturing labour is paid at the rate of $25 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $16 per direct manufacturing labour-hour. Only Job M1 was completed in May. Compute the total cost for Job M1.
Expenditures for acquisition of raw materials for your products are a part of which Costing type?1 puntoDirect CostIndirect CostStaff CostMaterial Cost
The following company information is available for March. The direct materials price variance is: Direct materials purchased and used 4,700 feet @ $99 per footStandard costs for direct materials for March production 4,800 feet @ $97 per foot
All of the following are manufacturing costs except:Multiple choice question.direct materialsoffice salariesdirect laboroverhead costs
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.