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ChocAttack makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although ChocAttack makes a variety of candies, the
ChocAttack makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although ChocAttack makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. ChocAttack has a total capital investment of $17,000,000. It expects to produce and sell 700,000 cases of candy next year. ChocAttack requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) ChocAttack prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Requirements Requirement 1.1 Requirement 2. Begin by calculat Target revenues 1. What is the target operating income? 2. What is the selling price ChocAttack needs to charge to earn the target operating income? Calculate the markup percentage on full cost. 3. ChocAttack is considering increasing its selling price to $14 per case. Assuming production and sales decrease by 3%, calculate ChocAttack's return on investment. Is increasing the selling price a good idea? Variable costs Contribution mar Fixed costs Target operating! Print Done entage on full cost Data table Variable production costs $4.50 per case Variable marketing and distribution costs $2.00 per case Fixed production costs $1,810,000 Fixed marketing and distribution costs $500,000 Other fixed costs $200,000 Print Done - X Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) x Target operating income Requirement 2. What is the selling price ChocAttack needs to charge to eam the target operating income? Calculate the markup percentage on full cost Begin by calculating the target revenues by working backwards from the target operating income. Target revenues Variable costs Contribution margin Fixed costs Target operating income ChocAttack must charge per case to eam the target operating income. Now calculate the markup percentage on full cost. Determine the formula, then compute the markup percentage. (Enter the per unit amounts to the nearest cent. Enter the markup on full costs as a percentage rounded to two decimais, XXX%) Markup on full costs ( Requirement 3. ChocAttack is considering increasing its selling price to $14 per case. Assuming production and sales decrease by 3%, calculate ChocAttack's return on investment. Is increasing them selling price a good idea? Begin by calculating the new target operating income. Target revenues Requirement 3. ChocAttack is considering increasing its selling price to $14 per case. Assuming production and sales decrease by 3%, calculate ChocAttack's return on investment. Is increasing the seling price a good idea? Begin by calculating the new target operating income. Target revenues Variable costs Contribution margin Foxed costs Target operating income (Enter your answer as a percentage rounded to two decimal places, XXX%) ChocAttack's retum on investment is Is increasing the selling price a good idea? Increasing the selling price investment a good idea because the 12% target return on investment. which results in a return on investment. The new return on
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