(Answered) Problem - patty corporation has predicted the following

Accounting

PROBLEM - Patty Corporation has predicted the following costs for the year for based upon 100,000 units of product.

Manufacturing Selling & Administrative

Variable $1,600,000 $600,000

Fixed 2,400,000 1,200,000

Total $4,000,000 $1,800,000

A. Calculate the markup percentage on variable manufacturing costs to achieve a profit of $200,000. Calculate the unit selling price needed to obtain this target profit.

B. Calculate the markup percentage on manufacturing costs to obtain a profit of $200,000. Calculate the unit selling price needed to obtain this target profit.

C. Which one of the above (A or B) results in less risk for Patty Corporation? Explain your choice.

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