Comtel Electronics Companys predicted 2014 variable and xed costs are as follows:

	Variable Costs	Fixed Costs
Manufacturing	$400,000	$260,000
Selling and administrative	180,000	50,400
Total	$580,000	$310,400

Comtel Electronics, Inc., is a small company producing a wide variety of computer interface devices. Per-unit manufacturing cost information about one of these products, a high-capacity ash drive, is as follows:

Direct materials ...............................................................	$8
Direct labor...................................................................	7
Manufacturing overhead ........................................................
Variable....................................................................	5
Fixed......................................................................	7
Total manufacturing costs ......................................................	$27

Variable selling and administrative costs for the ash drive is $4 per unit. Management has set a 2014 target prot of $200,000 on the sale of the ash drive.

Required

a. Determine the markup percentage on variable costs required to earn the desired prot.

b. Use variable cost markup to determine a suggested selling price for the ash drive.

c. For the ash drive, break the markup on variable costs into separate parts for xed costs and prot. Explain the signicance of each part.

d. Determine the markup percentage on manufacturing costs required to earn the desired prot.

e. Use the manufacturing costs markup to determine a suggested selling price for the ash drive.

f. Evaluate the variable and the manufacturing cost approaches to determine the markup percentage.