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    Calculating the target variable cost per unit

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    A company believes it can sell 5,000,000 of its proposed new optical mouse at a price of $11.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the target variable cost per mouse?

    A company estimates that ordering costs are $2.00 per order, picking costs are $1.00 per unique item ordered, packing costs are $0.07 per item, and return costs are $40.00 per return. A customer orders $8,000 worth of goods with direct costs of $6,200. The customer places 70 orders, orders 24 unique items, 940 total items, and makes 7 returns. What is the customer profit (loss)?

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    Solution Summary

    There are two problems. Solution to first problem depicts the steps to calculate the target variable cost per unit. Solution to second problem calculates the profit/loss of a customer.