Gerber Clothing Inc. has designed a rain suit for outdoor enthusiasts that is about to be introduced on the market. A standard cost card has been prepared for the new suit, as follows: Q52hit1br Standard price Standard or Rate Cost hours Direct materials 2.6 metres 5 15 per metre $39.66 Direct labour 1.6 hours 22 per hour 22.66 Manufacturing overhead (1/6 variable) 1.6 hours 27 per hour 27.66 Total standard cost per suit $88.66 a. The only variable selling and administrative costs will be $6 per suit for shipping. Fixed selling and administrative costs will be as follows (per year): Salaries $ 37,646 Advertising and other 176,666 Total $267,640 c. Since the company manufactures many products. it is felt that no more than 11,700 hours of labour time per year can be devoted to production ofthe new suits. d. An investment of $670,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment. The company wants a 20% ROI in new product lines. e. Manufacturing overhead costs are allocated to products on the basis of direct labour-hours. Required: 1. Assume that the company uses the absorption approach to cost-plus pricing. a. Compute the markup that the company needs on the rain suits to achieve a 20% ROI if it sells all ofthe suits it can produce using 11,700 hours of labour time. b. Using the markup you have computed. prepare a price quote sheet for a single rain suit. (Round your answers to 2 decimal places.) Direct materials a Direct labour 257,400.00 6 Manufacturing overhead 315,900.00 6 Unit product cost 1,029,600.00 a Add markup of unit product cost 411,840.00 9 Target selling price 2,441,44000 a