Wildhorse Look produces and sells high-end golf equipment. The company has recently been involved in developing various types of laser guns to measure distances on the golf course. The potential market for one small laser gun, the LittleWildhorse, appears to be very large. Because of competition, Wildhorse Look does not believe that it can charge more than $120 for LittleWildhorse. At this price, Wildhorse Look believes it can sell 100,000 laser guns. LittleWildhorse will cost $8,960,000 to manufacture, and the company wants an ROI of 20%. Determine the target cost for one LittleWildhorse. (Round answer to 2 decimal places, e.g. 15.25.)

Target cost

$enter the target cost in dollars rounded to 2 decimal places

2.

Crane Corporation produces industrial robots for high-precision manufacturing. The following information is given for Crane Corporation:

		Per Unit		Total
Direct materials		$380
Direct labour		270
Variable manufacturing overhead		80
Fixed manufacturing overhead				$1,475,000
Variable selling and administrative expenses		34
Fixed selling and administrative expenses				275,000

The company has a desired ROI of 20%. It has invested assets of $51,000,000. It expects to produce 2,500 units each year.

(a)

Correct answer icon

Your answer is correct.

Calculate the markup percentage and target selling price using absorption-cost pricing. (Round markup percentage to 3 decimal places, e.g. 15.250% and target selling price to 0 decimal places, e.g. 5,250.)

Markup percentage		enter percentages rounded to 3 decimal places	%
Target selling price		$enter a dollar amount rounded to 0 decimal places

eTextbook and Media

Attempts: 2 of 3 used

(b)

Calculate the markup percentage and target selling price using variable-cost pricing. (Round markup percentage to 3 decimal places, e.g. 15.250% and target selling price to 0 decimal places, e.g. 5,250.)

Markup percentage		enter percentages rounded to 3 decimal places	%
Target selling price		$enter a dollar amount rounded to 0 decimal places

3.

Blossom Corporation makes a mechanical stuffed alligator. The following information is available for Blossom Corporations expected annual volume of 500,000 units:

		Per Unit		Total
Direct materials		$12
Direct labour		9
Variable manufacturing overhead		12
Fixed manufacturing overhead				$400,000
Variable selling and administrative expenses		7
Fixed selling and administrative expenses				180,000

The company has a desired ROI of 30%. It has invested assets of $23,700,000.

(a)

Correct answer icon

Your answer is correct.

Using absorption-cost pricing, calculate the markup percentage. (Round answer to 2 decimal places, e.g. 15.25%.)

Markup percentage

enter the markup percentage %

eTextbook and Media

Attempts: 1 of 3 used

(b)

Using variable-cost pricing, calculate the markup percentage. (Round answer to 2 decimal places, e.g. 15.25%.)

Markup percentage

enter the markup percentage %