Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 48,000 units. Per Unit Total Direct materials $53 Direct labor $30 Variable manufacturing overhead $16 Fixed manufacturing overhead $720,000 Variable selling and administrative expenses $14 Fixed selling and administrative expenses $432,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 24% return on investment (ROI) on invested assets of $1,000,000. (a) Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 24% on this new component. (Round markup percentage to 2 decimal places, e.g. 10.50%.) Markup percentage % Target selling price $
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 48,000 units. Per Unit Total Direct materials $53 Direct labor $30 Variable manufacturing overhead $16 Fixed manufacturing overhead $720,000 Variable selling and administrative expenses $14 Fixed selling and administrative expenses $432,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 24% return on investment (ROI) on invested assets of $1,000,000. (a) Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 24% on this new component. (Round markup percentage to 2 decimal places, e.g. 10.50%.) Markup percentage % Target selling price $
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7PB: Remarkable Enterprises requires four units of part A for every unit of Al that it produces....
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