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How to calculate requirement 2? ChocAttack makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although ChocAttack makes
How to calculate requirement 2?
ChocAttack makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although ChocAttack makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. ChocAttack has a total capital investment of $12,000,000. It expects to produce and sell 450,000 cases of candy next year. ChocAttack requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) ChocAttack prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements. Ravlow Only i Click the icon to see the Worked Solution. Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) Capital investment Target return investment Target operating income. 1,440,000 12,000,000 12 % = $ Requirement 2. What is the selling price ChocAttack 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. $ 5,400,000 Target revenues 2,475,000 Variable costs Contribution margin 2,925,000 1,485,000 Fixed costs 1,440,000 Target operating income ChocAttack must charge $ 12 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%.) Data table Variable production costs $4.00 per case Variable marketing and distribution costs $1.50 per case Fixed production costs $435,000 Fixed marketing and distribution costs $800,000 Other fixed costs $250,000 Done Print - X
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