Migami 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 40,000 units.

Migami 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 20% return on investment (ROI) on invested assets of $1,200,000.

Instructions
(Round all calculations to two decimal places.)

(a) Compute the markup percentage and target selling price that will allow Migami Computer Parts to earn its desired ROI of 20% on this new component.

(b) Assuming that the volume is 25,000 units, compute the markup percentage and tar- get selling price that will allow Migami Computer Parts to earn its desired ROI of 20% on this new component.

Transcribed Image Text:

Per Unit Total Direct materials $50 Direct labor $25 Variable manufacturing overhead $20 Fixed manufacturing overhead $500,000 Variable selling and administrative expenses $15 Fixed selling and administrative expenses $400,000