I need help with (b) Problem 22-1A (Part Level Submission) (a) 80 32 112 SHOW SO

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I need help with (b)

Problem 22-1A (Part Level Submission)

(a)

80

32

112

SHOW SOLUTION

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(b) Compute the desired ROI per unit for M14–M16. (Round answer to 2 decimal places, e.g. 10.50.)

I need help with (b)

Problem 22-1A (Part Level Submission)

National Corporation needs to set a target price for its newly designed product M14–M16. The following data relate to this new product.
Per Unit Total Direct materials $ 23 Direct labor $ 38 Variable manufacturing overhead $ 12 Fixed manufacturing overhead $ 1,343,000 Variable selling and administrative expenses $ 7 Fixed selling and administrative expenses $ 1,185,000
These costs are based on a budgeted volume of 79,000 units produced and sold each year. National uses cost-plus pricing methods to set its target selling price. The markup percentage on total unit cost is 45 %.

Explanation / Answer

Total cost per unit has been correctly calculated by you and its $112 per unit.

Mark Up desired is 45% on cost. Hence, markup = $112 x 45% = $50.4 per unit.

Desired ROI = $50.4 per unit

Target Selling price = $112 + $50.4 = $162.4

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