Federer Industries Budgeted the Following Costs for the Production of Its

Multiple Choice

Federer Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: $$\begin{array} { l r } \text { Materials } & \$ 35,000 \\\text { Labor } & 25,000 \\\text { Overhead: } & \\\text { Variable } & 30,000 \\\text { Fixed } & 15,000 \\\text { Selling and administrative: } & \\\text { Variable } & 7,500 \\\text { Fixed } & \underline { 12,500 } \\\text { Total costs } & \$ 125,000\end{array}$$ Federer Industries has a target profit of $50,000.The average target markup for setting prices as a percentage of total variable costs would be _____.

A) 158%
B) 38%
C) 63%
D) 79%