Naylor Company is considering the introduction of a new product. Management has gathered the following information:

Number of units to be produced and sold each year . . . . . . . . . 12,500

Unit product cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30

Projected annual selling and administrative expenses . . . . . . . $60,000

Estimated investment required by the company . . . . . . . . . . . . $500,000

Desired return on investment (ROI) . . . . . . . . . . . . . . . . . . . . . . 18%

The company uses the absorption costing approach to cost-plus pricing.

Required:

1. Compute the markup required to achieve the desired ROI.

2. Compute the target selling price per unit.