Tony Nunzio, a building contractor, builds parking garages.

His company is capable of building multiple parking garages at once. Nunzio has budgeted for an expected number of parking garages in 2015 as follows:

Direct Materials	$2,000,000
Direct Labor	3,000,000
Job construction overhead - Variable Costs	2,000,000
Job construction overhead - Fixed Costs	1,000,000
Cost of jobs	$8,000,000
Selling and Administrative Costs - Variable	2,500,000
Selling and Administrative Costs - Fixed	1,500,000
Total Costs	$12,000,000

Nunzio wants an operating income of $2,000,000 for 2015.

Required:

1. Compute the average target markup percentage for setting prices as a percentage of the following:

a) Direct Materials plus Direct Labor

b) The full "Cost of Jobs"

c) The Variable "Cost of Jobs"

d) The full "Cost of Jobs" plus Selling and Administrative Costs

2. Why are these calculations important?

Answer rating: 100% (QA)

Answer Direct Materials 2000000 Direct Labor 3000000 Job construction ov... View the full answer