Sweet Ems makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Ems makes a variety of candies, the cost differences are insignificant, and the cases all sell for the same price. Sweet Ems has a total capital investment of $17,000,000. It expects to produce and sell 500,000 cases of candy next year. Sweet Ems requires a 12% target return on investment. Expected costs for next year are: (Click the icon to view the costs.) Sweet Ems prices the cases of candy at full cost plus markup to generate profits equal to the target return on capital. Read the requirements Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) X Capital investment 17,000,000 Target return on investment 12 % Target operating income $ 2,040,000 $ Requirement 2. What is the selling price Sweet Ems needs to charge to earn the target operating income? Calculate the markup percentage on full cost. Begin by calculating the target revenues by working backwards from the target operating income. Target revenues 17000000 Variable costs Contribution margin Fixed costs Target operating income - i Data Table Variable production costs $2.50 per case Variable marketing and distribution costs $1.00 per case Fixed production costs $1,960,000 Fixed marketing and distribution costs $650,000 Other fixed costs $600,000 Print Done i Requirements age 1. What is the target operating income? 2. What is the selling price Sweet Ems needs to charge to earn the target operating income? Calculate the markup percentage on full cost. 3. Sweet Ems is considering increasing its selling price to $15 per case. Assuming production and sales decrease by 5%, calculate SweetEms' return on investment. Is increasing the selling price a good idea? Print Done