Williams Inc. produces a single product, a part used in the manufacture of automobile transmissions. Known for its quality and performance, the part is sold to luxury auto manufacturers around the world. Because this is a quality product, Williams has some flexibility in pricing the part. The firm calculates the price using a variety of pricing methods and then chooses the final price based on that information and other strategic information. A summary of the key cost information follows. Williams expects to manufacture and sell 52,000 parts in the coming year. While the demand for Williamss part has been growing in the past two years, management is not only aware of the cyclical nature of the automobile industry but also concerned about market share and profits during the industrys current downturn.

Total Costs

Variable manufacturing

$

4,676,000

Variable selling and administrative

851,650

Plant-level fixed overhead

2,341,875

Fixed selling and administrative

671,495

Batch-level fixed overhead

356,000

Total investment in product line

22,346,000

Expected sales (units)

52,000

Determine the price for the part using a desired gross margin percentage to sales of 36%. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

4.	Determine the price for the part using a desired life-cycle cost percentage to sales of 21%. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

5.	Determine the price for the part using a desired before-tax return on investment of 11%. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

6.

Determine the contribution margin and operating profit for each of the methods in requirements 1 through 5. (Round your intermediate calculations to 3 decimal places.)

Method	Contribution Margin	Operating Profit
Markup on full manufacturing cost
Markup on life cycle costs
Price to achieve desired GM %
Price to achieve desired LCC %
Price to achieve desired ROA of 11%