Silco Pty Ltd Manufactures Various Lines of Computer Equipment

Silco Pty Ltd manufactures various lines of computer equipment. They are planning to introduce a line of laptop computers in January 2008. Current plans call for the production and sale of 1000 computers with estimated production costs as follows.
The average amount of capital invested in the laptop computer line is $900 000 and Silco's target return on investment for the line is 18 per cent. If Silco uses cost-plus pricing based on absorption cost, determine the mark-up percentage the company must use.

A) 21.6%
B) 15.7%
C) 29.5%
D) None of the given answers

Correct Answer:

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