The Smart TV Company manufactures televisions. The company is located in Ottawa, Ontario. The company has manufactured a new TV model and is using total cost-plus pricing in determining the selling price. The following financial information is available for this company that will make and sell 1,000 units:

Total Fixed costs $200,000

Total Variable cost per unit $400

Total Investment $5,000,000

Desired ROI 10%

Answer the following:

1) Calculate the ROI per unit, the target selling price per unit, and the mark-up percentage.

2) Explain what happens to the mark up % if total variable costs increase by $100 per unit.