Harrington Corporation needs to set a target price for its newly designed product R2-D2. The following data relate to this new product.

Per UnitTotal

Direct materials$ 8

Direct labor$14

Variable manufacturing overhead$ 7

Fixed manufacturing overhead$2,000,000

Variable selling and administrative expenses$ 6

Fixed selling and administrative expenses$1,200,000

These costs are based on a budgeted volume of 100,000 units produced and sold each year. Harrington uses cost-plus pricing methods to set its target selling price. The markup on total unit cost is 30%.

Instructions

(a) Compute the total variable cost per unit, total fixed cost per unit, and total cost per unit for R2-D2.

(b) Compute the desired ROI per unit for R2-D2.

(c) Compute the target selling price for R2-D2.

(d) Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 80,000 R2-D2s are sold during the year.