Cost-plus and target pricing. ($. $ridhar, adapted) Waterford, Inc., manufactures and sells 15,000 units of a raft RF17 in 2007. The full cost per unit is $240. Waterford earns a 20%

return on an investment of $2,160,000 in 2007. Ignore any income tax effects.

Required 1. Calculate die selling price ofRF17 in 2007. Calculate the markup percentage on the full cost per unit ofRF17 in 2007.

2. Ifthe markup percentage on variable costs per unit is 40%, calculate the variable cost per unit ofRF17 in 2007.

3. Calculate Waterford’s operating income if it sold 13,500 units of RF17 at a price of $276 per unit in 2007. Assume no change in total fixed costs for 2007.

4. In response to competitive pressures, Waterford must reduce the price of RF17 to $252 in 2008 to achieve sales of 15,000 units. Waterford plans to reduce its investment to

$1,980,000. IfWaterford wants to maintain a 20% return on investment, what is the target cost per unit in 2008?