5. (15 points) Excel Manufacturing is planning to make and sell 5,000 units of i

Question

5. (15 points) Excel Manufacturing is planning to make and sell 5,000 units of its only product, Excel-A. Excel is considering a variety of methods to determine the price of the order. Some key information about Excel follows: Variable Manufacturing Variable Selling and Administrative Plant-level Fixed Mfg. Overhead Fixed Selling and Administrative Batch-level Fixed Mig. Overhead Total Investment in Product Line Total Costs $650,000 125,000 700,000 200,000 50,000 2,000,000 Required: I. Determine the price using the markup of 40% of full manufacturing costs 2, Determine the price using a 20% markup on life cycle costs. 3, Determine the price assuming a desired 50% gross margin percentage. 4, Determine the price assuming a desired 30% return on life cycle costs. 5. Determine the price assuming a desired 20% return on investment.

Explanation / Answer

Answer 1.

Answer 2.

Answer 3:

Answer 4. :

Answer 5. :

variable manufacturing cost 650000 Plant level -fixed manufacturing cost 700000 Batch-level fixed maufacturing cost 50000 Total manufacturing cost 1400000 Add: 40% markup 560000 total revenue                                         (a) 1960000 Total units to be produced                      (b) 5000 Price per unit                                     (a/b)    392

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