Cravings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Cravings makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Cravings has a total capital investment of $17,000,000. It expects to produce and sell 650,000 cases of candy next year. Cravings requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) Cravings prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Requirements Data table 1. What is the target operating income? 2. What is the selling price Cravings needs to charge to earn the target operating income? Calculate the markup percentage on full cost. 3. Cravings is considering increasing its selling price to $15 per case. Assuming production and sales decrease by 6%, calculate Cravings' return on investment. Is increasing the selling price a good idea? Print Done Variable production costs $4.00 per case Variable marketing and distribution costs $1.50 per case Fixed production costs $2,185,000 Fixed marketing and distribution costs $750,000 Other fixed costs $550,000 Print Done 6. Cravings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Cravings makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Cravings has a total capital investment of $17,000,000. It expects to produce and sell 650,000 cases of candy next year. Cravings requires a 12% target return on investment. Expected costs for next year are: 1(Click the icon to view the costs.) Cravings prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) (1) (2) Target operating income % Requirement 2. What is the selling price Cravings needs to charge to earn 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 Cravings must charge per case to earn 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 decimals, X.XX%.) (3) (4) Markup on full costs % Requirement 3. Cravings is considering increasing its selling price to $15 per case. Assuming production and sales decrease by 6%, calculate Cravings' return on investment. Is increasing the selling price a good idea? Begin by calculating the new target operating income. Target revenues Variable costs Contribution margin Fixed costs Target operating income (Enter your answer as a percentage rounded to two decimal places, X.XX%.) Cravings' return on investment is Is increasing the selling price a good idea? Increasing the selling price (5) investment. 1: Data Table %. 2: Requirements Print a good idea because which results in a (7) return on investment. The new return on investment (8) the 12% target return on Variable production costs $4.00 per case Variable marketing and distribution costs $1.50 per case Fixed production costs $2,185,000 Fixed marketing and distribution costs Other fixed costs $750,000 $550,000 1. What is the target operating income? 2. What is the selling price Cravings needs to charge to earn the target operating income? Calculate the markup percentage on full cost. 3. Cravings is considering increasing its selling price to $15 per case. Assuming production and sales decrease by 6%, calculate Cravings' return on investment. Is increasing the selling price a good idea? (1) O Number of units Variable cost per unit O Capital investment O Variable production costs Cost of goods sold percentage O Full cost per unit (1) O O Capital investment Contribution margin Fixed production costs (4) O Number of units O Variable production costs Cost of goods sold percentage Markup percentage Target return on investment O Variable cost per unit (5) O is Full cost per unit is not Markup per unit Selling price per unit Full cost per unit Markup per unit Selling price per unit O Variable cost per unit (6) invested capital decreases without decreasing operating income, invested capital increases without increasing operating income, operating income decreases without increasing invested capital, operating income increases without increasing invested capital, (7) O higher lower (8) does not exceed exceeds