Naylor Company is considering the introduction of a new product. Management has gathered the following information:

Number of units to be produced and sold each year	12,500
Unit product cost	$30
Projected annual selling and administrative expenses	$60,000
Estimated investment required by the company	$500,000
Desired return on investment (ROI)	18%

The company uses the absorption costing approach to cost-plus pricing.

1.Compute the markup required to achieve the desired ROI.

Required ROI	18	%
Investment	$500,000
Selling and administrative expenses	60,000
Total production cost	$150,000
Unit product cost per unit	$30
Unit sales	12,500
Total sales	$375,000
Markup percentage		%

2.Compute the target selling price per unit. (Do not round intermediate percentage values.)

Unit product cost	$30
Markup	12
Target selling price per unit