PRINTER VERSION | BACK NEXT ter Lovell Computer Parts Inc. is in the process of

Question

PRINTER VERSION | BACK NEXT ter Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The ew an following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 55,000 units. Per Unit $ 54 s 22 $ 23 Total Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 550,000 s275,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular es Variable selling and administrative expenses 13 n. Fixed selling and administrative expenses product, management also directs that the target price be set to provide a 21 % return on investment (ROI) on invested assets or s 1,115,400 ? Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 21 % on this new component. (Round answers to 2 decimal places, e.g. 10.50.) Markup percentage Target selling price ti s LINK TO TEXT MacBook Air

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering Q1 here :

Question 1) a) Desired Income = 111540 * 21% = $234234 Cost item Per unit Total Mark-up percentage Production 55000 Material D 54 2970000 Labor D 22 1210000 V Manuf O/h 23 1265000 F Manuf Overhead 10 550000 Variable selling & Admin exp 13 715000 F selling and admin expenses 5 275000 Total costs 127 6985000 NOI 4    234234 3.35% of cost Target Selling price $131 $7219234

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