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Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 46,000 units.
Per Unit | Total | ||||||
Direct materials | $ 46 | ||||||
Direct labor | $ 26 | ||||||
Variable manufacturing overhead | $ 17 | ||||||
Fixed manufacturing overhead | $ 506,000 | ||||||
Variable selling and administrative expenses | $ 15 | ||||||
Fixed selling and administrative expenses | $ 368,000 |
Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 20 % return on investment (ROI) on invested assets of $ 1,280,300 .
Assuming that the volume is 41,200 units, compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 20 % on this new component. (Round answers to 2 decimal places, e.g. 10.50.)
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