Posted: August 24th, 2016

What is the markup on Cost of Goods sold?

What would be the price for a product that has a cost of $500, assuming that the markup is based on cost of goods sold?
a. $834
b. $625
c. $708
d. $2,000
12. Gage Company had the following information:
Revenues $600,000
Cost of Goods Sold 60%
Selling and administrative expenses 0,000
What is the markup on Cost of Goods sold?
a. .1833
b. .6667
c. .3611
d. none of these
ANS: B
Support:
Cost of Goods Sold = .60 ? $600,000 = $360,000
Operating Income = $600,000 – $360,000 – $130,000 = $110,000
Markup on COGS = (selling and administrative expenses + operating income) / COGS
.6667 = ($130,000 + $110,000) / $360,000
PTS: 1 DIF: Difficult OBJ: 18-2 NAT: AACSB Analytic
13. Perry Products is thinking of expanding their product line. Their current income statement is as follows:
Revenues $600,000
Cost of Goods Sold:
Direct Materials $250,000
Direct Labor 100,000
Overhead 80,000 430,000
Gross Profit 170,000
Selling and Administrative 70,000
Operating Income $100,000