Eye Robotics Parts Inc. is in the process of setting a selling price on a new robotics 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 100,000 units.

Eye Robotics 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 30% return on investment (ROI) on invested assets of $3,000,000.

Instructions
(Round all calculations to two decimal places.)
(a) Compute the markup percentage and target selling price that will allow Eye Robotics to earn its desired ROI of 30% on this new component.
(b) Assuming that the volume is 80,000 units, compute the markup percentage and target selling price that will allow Eye Robotics to earn its desired ROI of 30% on this newcomponent.

Transcribed Image Text:

Total Per Unit $30 $20 $20 Direct materials Direct labor ariable manufactunng overhea Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $2,400,000 $ 8 $500,000