Question
Sunshine Travel Agency offers customized travel packages. The agency expects to sell 2,500 packages annually. They have invested $2,000,000 in their facilities and aim for
Sunshine Travel Agency offers customized travel packages. The agency expects to sell 2,500 packages annually. They have invested $2,000,000 in their facilities and aim for an ROI of 15%. The budgeted costs for the coming year are detailed below:
| Cost Item | Per Package ($) | Total ($) |
|---|---|---|
| Direct Materials (Tickets, etc.) | 150 | 375,000 |
| Direct Labor (Agents) | 50 | 125,000 |
| Variable Overhead | 25 | 62,500 |
| Fixed Overhead | - | 500,000 |
| Variable Selling & Admin Expenses | 10 | 25,000 |
| Fixed Selling & Admin Expenses | - | 250,000 |
Required:
- Determine the total cost per package.
- Calculate the desired ROI per package.
- Compute the target price per package.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
