The DELL Company is in the process of developing a new product called (ZZ). The product current design carries with it following costs:

Statements	Total Costs
Total variable production costs	780,000
Fixed manufacturing overhead	220,000
Total production costs	1,000,000
Total selling, general, and administrative expenses	400,000
Total costs and expenses	1,400,000

• Units to be Produced 40,000.
• The company requires a $ 320,000 profit, and 20% return on assets (ROA).
• The company uses assets totaling $ 1,600,000 in producing.

Instructions:

1. Compute the price of (ZZ) using the Gross margin pricing method. (4 marks)
2. Compute the price of (ZZ) using the Return on assets pricing method. (4 marks)
3. Prepare income statement to support your answer. (4 marks)