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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 ItemPer Package ($)Total ($)
Direct Materials (Tickets, etc.)150375,000
Direct Labor (Agents)50125,000
Variable Overhead2562,500
Fixed Overhead-500,000
Variable Selling & Admin Expenses1025,000
Fixed Selling & Admin Expenses-250,000

Required:

  1. Determine the total cost per package.
  2. Calculate the desired ROI per package.
  3. Compute the target price per package.

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