XYZ Corporation needs to set a target price for its newly designed product The Marquis". The following data relate to this new product: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit Total $20 40 10 $1,400,000 5 1,120,000 The costs above are based on a budgeted volume of 80,000 units produced and sold each year. XYZ uses cost-plus pricing to set its target selling price. The absorption-cost approach and the variable-cost approach information is provided by the accounting department using a markup of 50% on the manufacturing cost per unit and a markup of 75% on the variable cost. Calculate target price using absorption-cost and variable-cost approaches. Required a. Calculate the target price for one unit of "The Marquis" using the absorption-cost approach b. Calculate the target price for one unit of "The Marquis" using the variable-cost approach QUESTION #1 Mahindera Corporation needs to set a target price for a new synthetic oil it has developed for tractors used in hot climates. It reduces wear and tear and time between servicing. The following data relate to it: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit Total $15 25 14 $4,000,000 12 2,000,000 These costs are based on a budgeted volume of 1 million units produced and sold each year. Mahindera uses cost-plus pricing to set its target selling price. The markup on the total unit cost is 25%. Using cost plus pricing strategies determine the following Required a. Calculate the total variable cost per unit, total fixed cost per unit, and total cost per unit for the new oil. b. Calculate the desired ROI per unit for synthetic oil. c. Calculate the target selling price for synthetic oil. d. Calculate the variable cost per unit, fixed cost per unit, and total cost per unit, assuming that 800,000 units are produced during the year