I Co. recently began production of a new product, an electric clock, which required the investment of
$2,500,000 in assets. The costs of producing and selling 100,000 units of the clocks are estimated as
follows:	SEE PAGES 526.
	Variable costs:					Per unit
		Direct labor				$ 18
		Direct materials				$ 16
		Factory overhead				$ 6
		Administrative and selling				$ 4
	Fixed costs:
		Manufacturing				$ 1,200,000
		Administrative and selling				600,000
I Co. is considering establishing a price to sell it's electrical clock to the market. The CEO has
decided to use a cost plus approach to product pricing and that the clock must earn 12 percent on
it's invested assets.
	Instructions: NOTE: SHOW ALL WORK.
	1.	Determine the amount of desired profit from the production and sale of the
		electric clock.		SEE PAGE 527.
	2.	Assuming that the product cost method is used, determine (a) total cost per
		unit, (b) the mark-up percentage, and ( c ) the selling price per unit.