Sweet Tastings

SweetTastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings

SweetTastings makes a variety ofcandy, the cost differences areinsignificant, and the cases all sell for the same price. Sweet Tastings

SweetTastings has a total capital investment of $ 10 comma 000 comma 000

$10,000,000. It expects to produce and sell 400 comma 000

400,000 cases of candy next year. Sweet Tastings

SweetTastings requires a 12

12% target return on investment. Expected costs for next yearare:

Sweet Tastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings makes a variety of candy, the cost differences are insignicant, and the cases all sell for the same price. Sweet Tastings has a total capital investment of $10,000,000. lt expects to produce and sell 400,000 cases of candy next year. Sweet Tastings requires a 12% target return on investment. Expected costs for next year are: g (Click the icon to view the costs.) Sweet Tastings prices the cases of candy at full cost plus markup to generate prots equal to the target return on capital. Read the @uirements. Requirement 1. What is the target operating income? (Enter the percentage as a whole number.) Capital investment x Target return on investment $ 10,000,000 x Requirement 2. What is the selling price Sweet Tastings 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. |:| Contribution margin |:| Fixedmsts E Target operating income l;| Target revenues Variable costs 12% Target operating income $ 1,200,000 0 Data Table - Variable production costs $3.00 per case Variable marketing and distribution costs $2.00 per case Fixed production costs $400,000 Fixed marketing and distribution costs $700,000 Other fixed costs $500,000 \\/ Requirements - X What is the target operating income? What is the selling price Sweet Tastings needs to charge to earn the target operating income? Calculate the markup percentage on full cost. Sweet Tastings is considering increasing its selling price to $13 per case. Assuming production and sales decrease by 10%, calculate Sweet Tastings' return on investment. ls increasing the selling price a good idea