BM1915

Laboratory Exercise
Applying Pricing Decisions in MS Excel

Objectives:

At the end of the exercise, the students should be able to:

▪ Determine the selling price using different cost bases.

Equipment:

▪ Computer
▪ MS Excel

Basic Principles:
Below is the general formula to determine the markup percentage based on cost. Note again that the cost
referred to here could be composed of different amounts incurred by the firm.

Profit required to achieve + Total annual costs not

Markup percentage
= target ROI included in the cost base
applied to cost base
Annual volume x Cost base per unit used

Selling price per unit = Cost base per unit x (100% + markup on cost)

Problem:
Marby Corporation started operations on January 1, 201A and expected to produce 200,000 units in its first
year of operations. The cost data per unit based on expected production are shown below:

Direct materials P48 Fixed manufacturing overhead P3.00

Direct labor 12 Fixed selling expenses 2.00
Variable manufacturing overhead 6 Variable selling expenses 2.50

Management is trying to decide on what selling price would they project the 201A sales. You are tasked to
compute the mark up percentage and selling price based on each of the following independent cases below:

1. 25% markup on prime costs

2. 70% markup based on conversion costs
3. 20% markup based on total manufacturing costs
4. 22% markup based on variable manufacturing costs
5. 20% markup based on total costs
6. 24% markup based on variable costs

The markup percentage may be expressed in decimal form or in percentage. Round it off in two (2) decimal
places.

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Procedure:

1. Open MS Excel and start a new worksheet.

2. Enter the information following the correct formats.

For the given values, use the following:

Heading, Column Titles Font style: Arial, bold

Font size: 10 pt
Alignment: Center
Row height: 15
Account Titles Font style: Arial
Font size: 10 pt
Alignment: Align Left
Row Height: 15
Column Width: 36
Amounts Font style: Arial
Font size: 10 pt
Alignment: Align Right
Row Height: 15
Column Width: 12

For the answer and problem solving, use the following format:

Heading, Column Titles Font style: Arial, bold

Font size: 10 pt
Alignment: Align Left
Row height: 15
Account Titles Font style: Arial
Font size: 10 pt
Alignment: Align Left
Row Height: 15
Column Width: 36
Amounts Font style: Arial
Font size: 10 pt
Alignment: Align Right
Row Height: 15
Column Width: 12

3. Using standard costing and variance analysis, compute for the variances and indicate whether it is
favorable or unfavorable.
4. Enter the following information in Figure 1 for the given values.

Figure 1. Cost data

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5. Enter the following information in Figures 2‒7 for the problem solving.

Figure 2. Markup based on conversion costs

Figure 3. Markup based on conversion costs

Figure 4. Markup based on total manufacturing costs

Figure 5. Markup based on variable manufacturing costs

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Figure 6. Markup based on total costs

Figure 7. Markup based on variable costs

6. Save the Excel file as Surname_ProjMgtExer10 and place it on the network drive.

Rubric for grading the output:

CRITERIA PERFORMANCE INDICATORS POINTS
Neatness and The spreadsheet has exceptional formatting, and the information is well-
20
Organization organized.
The spreadsheet formulas are well-developed and will correctly
Formulas 30
determine the needed information.
Titles, Labels, and
The spreadsheet contains clearly labeled rows and columns. 10
Headings
The spreadsheet meets all the necessary requirements to interpret the
Content 40
result of the operation.
TOTAL 100

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