Asked by renzer hayer on Sep 22, 2024
Verified
M Studios buys cameras at a unit cost of $150. Their operating expense is 20% per unit of cost, and their desired unit operating profit is 30% of cost. What is M Studios' rate of mark-up on cost?
A) 33.3%
B) 20%
C) 50%
D) 30%
E) 25%
Operating Expense
Operating expense includes all necessary expenditures that a business incurs as a result of performing its normal business operations, excluding the cost of goods sold.
Operating Profit
The profit earned from a firm's core business operations, excluding deductions of interest and taxes.
Mark-up
The amount added to the cost price of goods to cover overhead and profit.
- Understand and calculate mark-up rates and selling prices in business scenarios.
Verified Answer
AK
Amrendra kushwaha1 day ago
Final Answer :
C
Explanation :
The mark-up on cost is calculated by adding the operating expense and desired profit, then dividing by the cost. Operating expense is 20% of $150, which is $30. Desired profit is 30% of $150, which is $45. So, the total mark-up is $75 on a cost of $150, resulting in a 50% mark-up on cost.
Learning Objectives
- Understand and calculate mark-up rates and selling prices in business scenarios.