S'well produces water bottles. Variable costs include raw materials and direct labour and variable selling expenses. Fixed costs include salaries for factory supervisor and the necessary equipment to produce the bottles. There are also fixed marketing and administrative costs. S'well owner Sarah Kauss has $280,000 invested in the business and desires an 6% return on her investment. S'well sells 5,000 water bottles per year across Canada.

Production costs

Variable cost$10 Per Unit

Fixed$60,000 Per Year

Selling, Marketing and Administrative Costs

Variable$5 Per Unit

Fixed$15,000 Per Year

Using the variable cost-based pricing, what are the mark-up percentage and the selling price?

Select one:

a. Mark-up percentage 122.40% Selling Price $33.36

b. Mark-up percentage 112.25% Selling Price $40.79

c. Mark-up percentage 34.26% Selling Price $36.85

d. Mark-up percentage 65.23% Selling Price $42.56