Use cost-plus pricing to determine various amounts.

Wamser Corporation needs to set a target price for its newly designed product, E2-D2. The following data relate to it:

	Per Unit	Total
Direct materials	$15
Direct labour	25
Variable manufacturing overhead	14
Fixed manufacturing overhead		$4,000,000
Variable selling and administrative expenses	12
Fixed selling and administrative expenses		2,000,000

These costs are based on a budgeted volume of 1 million units produced and sold each year. Wamser uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 25%.

Instructions

(a)

Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for E2-D2.

(b)

Calculate the desired ROI per unit for E2-D2.

(c)

Calculate the target selling price for E2-D2.

(d)

Calculate the variable cost per unit, fixed cost per unit, and total cost per unit, assuming that 800,000 E2-D2s are produced during the year. (Round to two decimal places.)