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:

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$)$:

b$.$ Since the company manufactures many products, it is felt that no more than $10,500$ hours of labour time per year can be devoted to

production of the new suits.

c$.$ An investment of $$550,000$ 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.

d$.$ Manufacturing overhead costs are allocated to products on the basis of direct labour$-$hours

$\backslash$table$[[$c$-1.$ Assume that the company is able to sell all of the rain suits that it can produce. Prepal$|],[$activity$.],[\backslash$table$[[$Sales$,],[$Less cost of goods sold,$],[$Gross margin,$],[$Less selling. general, and administrative expenses:,$],[$Shipping$,],[$Salaries$,],[$Advertising and other,$],[$Total selling. general, and administrative expense,$],[$Operating income,$]]]]$

c$\mathrm{.}2.$ Compute the company's ROI for the year on the suits, using the ROI formula, $($Do not round intermediate calculations.$)$

Repeat requirements $1$a and $1b$ above, assuming that the company uses the total variable costing approach to cost$-$plus pricing. $($Do

not round intermediete colculetions. Round your onswers to $2$ decimel pleces.$)$