Price Determination

Soft Industries has just patented a new lotion with lasting sun protection. The company's controller has developed the following annual information for use in price determination meetings:

Variable production costs	$450,000
Fixed overhead	250,000
Selling expenses	100,000
General and administrative expenses	75,000
Desired profit	315,000
Cost of assets employed	1,000,000

Annual demand for the product is expected to be 500,000 tubes. On average, the company now earns an 8 percent return on assets.

1. Compute the projected unit cost for one tube of lotion. Round your answer to the nearest cent. $per unit.

2. Usinggross margin pricing, compute the markup percentage and selling price for one tube. Round your selling price answer to the nearest cent.

Markup Percentage	%
Gross MarginBased Price	$	per unit

3. Usingreturn on assets pricing, compute the unit price for one tube. Round your answer to the nearest cent. $per unit.