1.Wamser Corporation needs to set a target price for its newly designed product, E2-D2. The following data relate to it:

Per Unit Total

Direct materials $15

Direct labour $25

Variable manufacturing overhead $14

Fixed manufacturing overhead $4,000,000

Variable selling and administrative expenses $12

Fixed selling and administrative expenses $2,000,000

These costs are based on a budgeted volume of 1 million units produced and sold each year. Wamser uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 25%.

Instructions:

(a) Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for E2-D2.

(b) Calculate the desired ROI per unit for E2-D2.

(c) Calculate the target selling price for E2-D2.

(d) Calculate the variable cost per unit, fixed cost per unit, and total cost per unit, assuming that 800,000 E2-D2s are produced during the year (Round to two decimal places).