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Marigold Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following
Marigold 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 47,000 units. Per Unit Total Direct materials $42 $23 $18 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $564,000 $17 $376,000 Marigold Computer Parts management requests that the total unit cost be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 25% return on investment (ROI) on invested assets of $940,000. Assuming that the volume is 37,600 units, compute the markup percentage and target selling price that will allow Marigold Computer Parts to earn its desired ROI of 25% on this new component. (Round answers to 2 decimal places, eg. 10.50% or 10.50.) Markup percentage % Target selling price A
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