Hodson Ltd is a one product firm with material cost per unit of £100.00 and labour cost per unit of £37.50. Labour cost is incurred at the rate of £25.00 per hour, and overheads are absorbed at the rate of £12.00 per labour hour. Hodson Ltd prices its products to achieve a margin of 20%.
How much mark up should Hodson apply to achieve this margin?
Total cost per unit + Profit Margin per unit = Selling price per unit Assume selling price to be £100, Profit Margin = Selling price X Margin Profit Margin = £100 X 20% Profit Margin = £20 Assume "x" to be Total cost per unit. Lets put this in the equation to determine the total cost per u ... See the full answer