At the end of year 2020, Company X has to shut down its operations due to unknown mysterious force Both products, especially Product A An investor decides to invest $2,500,000 to re open Company X The investor requests that Company X should continue to produce Product A only, and also asks for a return of 30 The manufacturing costs information follows costs in Table 1 Assume the manufacturing overhead costs are variable costs Annual sales volume for Product A remains 4,000 for future years The selling and administrative expense follows Table 2, 30 of which is variable and 70 is fixed If the company decides to follow what the investor suggested Calculate the variable cost per unit, fixed cost per unit, manufacturing cost per unit, and total cost per unit (2) Calculate the target selling prices and mark up percentages, using both the total cost plus and absorption cost plus methods Table 1 Company X Unit Manufacturing Costs Panel A Labor usage for Product A and Product B Product A Product B Direct labor I hours 3 5 1 5 Direct labor I cost hour $20 $20 Direct labor II hours 4 8 Direct labor II cost hour $30 $30 Panel B Manufacturing Costs per unit for Product A and Product B Product A Product B Direct materials $650 $250 Direct labor I 70 30 Direct labor II 120 240 Manufacturing overhead 100 200 Manufacturing costs per unit 940 720 Table 2 Company X Income Statement 2020 Company X Income Statement Year Ended Dec 31, 2020 Sales Cost of goods sold Gross margin Product A 5040000 3760000 1280000 Product B 19800000 15840000 3960000 Total 24840000 19600000 5240000 Selling and admin expenses 780,000 2,640,000 3,420,000 Net profit 500000 3696000 4196000 Units produced and sold 4,000 22,000 Net profit per unit sold 125 168 Based on the pricing calculations, (1) briefly discuss how the new price compare to the original price of Product A (2) If managers are reluctant to change the original price of Product A Which desired rate of return on investment can lead to the original price of Product A (need with Calculations)

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At the end of year 2020, Company X has to shut down its operations due to unknown mysterious force. Both products, especially Product A An

At the end of year 2020, Company X has to shut down its operations due to unknown mysterious force. Both products, especially Product A An investor decides to invest $2,500,000 to re-open Company X. The investor requests that Company X should continue to produce Product A only, and also asks for a return of 30%. The manufacturing costs information follows costs in Table 1 . Assume the manufacturing overhead costs are variable costs. Annual sales volume for Product A remains 4,000 for future years. The selling and administrative expense follows Table 2, 30% of which is variable and 70% is fixed. If the company decides to follow what the investor suggested

Calculate the variable cost per unit, fixed cost per unit, manufacturing cost per unit, and total cost per unit. (2) Calculate the target selling prices and mark-up percentages, using both the total cost-plus and absorption cost-plus methods.

Table 1: Company X Unit Manufacturing Costs

Panel A. Labor usage for Product A and Product B Product A Product B
Direct labor I hours	3.5	1.5
Direct labor I cost / hour	$20	$20
Direct labor II hours	4	8
Direct labor II cost / hour	$30	$30
Panel B. Manufacturing Costs per unit for Product A and Product B Product A Product B
Direct materials	$650	$250
Direct labor I	70	30
Direct labor II	120	240
Manufacturing overhead	100	200
Manufacturing costs per unit	940	720

Table 2: Company X Income Statement 2020 Company X

Income Statement

Year Ended Dec. 31, 2020

Sales Cost of goods sold Gross margin	Product A 5040000 3760000 1280000	Product B 19800000 15840000 3960000	Total 24840000 19600000 5240000
Selling and admin expenses	780,000	2,640,000	3,420,000
Net profit	500000	3696000	4196000
Units produced and sold	4,000	22,000
Net profit per unit sold	125	168

Based on the pricing calculations, (1) briefly discuss how the new price compare to the original price of Product A. (2) If managers are reluctant to change the original price of Product A. Which desired rate of return on investment can lead to the original price of Product A? (need with Calculations)