E7–2 Time allowed: 10 minutes Martin Company is considering the introduction of a new product. To determine a target selling price, the company has gathered the following information:

Required The company uses the absorption costing approach to cost-plus pricing.
1 Compute the mark-up the company will have to use to achieve the desired ROI.
2 Compute the target selling price per unit.

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Number of units to be produced and sold each year 14,000 Unit product cost 25 Projected annual selling, general, and administrative expenses 50,000 Estimated investment required by the company 750,000 Desired return on investment (ROI) 12%