Willian Inc. Produce a single product that is a component of the automotive industry factory. William Inc. is known as a company with high quality products. Due to the quality of his products, William can be flexible in determining prices. Willian Inc. calculates prices using different types of pricing methods and ultimately chooses based on information and other information. Willian Inc. expects to produce and sell 48,500 components in the coming year. Over the past two years its demand has increased, while companies are unaware of the natural cycle of the automotive industry. But the company continues to focus on the profit market share that is currently in decline.

Variable manufacturing $4,680,000

Variable sellling and administrative $855,650

Plant-level fixed overhead $2,345,875

Fixed selling and adminstrative $675,495

Batch- level fixed overhead $360,000

Total Investment in product line $22,350,000

Expected sales (unit) 48.500

Question:

1. Determine the price of the component by using a markup of 45% of the full manufacturing cost

Full Manufacturing Cost

2. Determine the price of the component by using a markup of 25% of the full life cycle cost

3. Determine the price of the component using the desired gross margin percentage, amounting to 40% of sales

4. Determine the price of the component by using the desired life cycle cost of 25% of sales

5. Determine the price of the component by using the desired pre-tax profit of 15% of the investment

6. Determine margin and operating profit contribution for each method from 1 to 5 . Which price do you choose? Why

7. Give an explanation of your overall answer