Cost-plus, target return on investment pricing. Sweet Tastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Sweet Tastings has a total capital investment of $10,000,000. It expects to produce and sell 400,000 cases of candy next year. Sweet Tastings requires a 12% target return on investment. Expected costs for next year are: Variable production costs Variable marketing and distribution costs Fixed production costs Fixed marketing and distribution costs $3.00 per case $2.00 per case $400,000 $700,000 $500,000 Other fixed costs Sweet Tastings prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital.

Cost-plus, target return on investment pricing. Sweet Tastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Sweet Tastings has a total capital investment of $10,000,000. It expects to produce and sell 400,000 cases of candy next year. Sweet Tastings requires a 12% target return on investment. Expected costs for next year are: Variable production costs Variable marketing and distribution costs Fixed production costs Fixed marketing and distribution costs $3.00 per case $2.00 per case $400,000 $700,000 $500,000 Other fixed costs Sweet Tastings prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 2PB: Mortech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and...

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Cost-plus, target return on investment pricing. Sweet Tastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Sweet Tastings has a total capital investment of $10,000,000. It expects to produce and sell 400,000 cases of candy next year. Sweet Tastings requires a 12% target return on investment. Expected costs for next year are:
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