Reference no: EM132537103

Question 1: Avocado Ltd produces small electronic components for kitchen appliances. This year it expects to produce 10 000 units of component X. The variable manufacturing cost of component X is $2 per unit and the variable selling and administrative cost of component X is $3 per unit. In addition, to produce component X Avocado Ltd incurs annual fixed manufacturing cost of $50 000 and annual fixed selling and administrative cost of $60 000. If the target profit is $2 per unit, and using cost plus pricing approach, the mark up percentage based on total variable costs is:

Select one:

Option a. 260%

Option b. 80%

Option c. 63.6%

Option d. 12.5%