ACME Incorporated has cost information for a potential new product as follows:

 

Direct material per unit	$8.00
Direct labour per unit	$5.00
Manufacturing overhead per year	$250,000
Selling and administrative per year	$150,000

 

Additional information:

• the company plans to produce and sell 30,000 units per year
• manufacturing overhead costs are 80% fixed and the remainder variable
• selling and administrative costs include a variable amount of $4 per unit
• the company wants a 20% ROI on new products
• an investment in inventories and new equipment totalling $400,000 will be needed

Required: 

Calculate the markup percent the company will have to use to achieve the desired ROI using the total variable costing approach.