Based on the information in multiple choice question 13.15, calculate the mark-up percentage and selling price assuming that Clay Cookery uses variable cost-based pricing.

Mark-up percentage.............................Selling price

a.         5.32%......................................................$34.73

b.         34.26%....................................................$34.73

c.         27.48%....................................................$32.98

d.         363%.......................................................$34.73

Data from Question 13.15:

Clay Cookery produces ceramic cookware. Variable costs include clay and glazes for each crock and selling expenses. Fixed costs include salaries for potters and the necessary equipment to produce the cookware. There are also fixed marketing and administrative costs. Clay Cookery’s owner has $80,000 invested in the business and desires an 8% return on his investment. Clay Cookery sells 3,650 crocks per year.

Product Costs

Variable..........................$4.50 per crock

Fixed..........................$78,000 per year

Selling, Marketing, and Administrative Costs

Variable..........................$3.00 per crock

Fixed..........................$15,000 per year