Explore BrainMass
Share

Explore BrainMass

    mark up percentage and target selling price

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A budget of 50,000 units

    Per Unit Total
    Direct Materials $50.00
    Direct Labor $25.00
    Variable Manufacturing overhead $20.00
    Fixed manufacturing overhead $600,000
    Variable selling and admin. Expenses $18.00
    Fixed selling and admin expenses $400,000

    Bolus Computer parts management request that the total cost per unit be used in a cost plus
    Pricing products. On this particular product, management also directs that the target price
    Be set to provide a 25% return on investment ROI on invested assets of $1,200,000.00

    Instructions

    B.

    Assuming that the volume is 40,000 units compute the mark up percentage and target
    Selling price that will allow bolus computer parts to earn its desired ROI of 25% on this
    New component.

    © BrainMass Inc. brainmass.com October 9, 2019, 9:07 pm ad1c9bdddf
    https://brainmass.com/business/business-management/mark-up-percentage-and-target-selling-price-174048

    Solution Preview

    Variable costs per unit:

    Direct Materials $50.00
    Direct Labor $25.00
    Variable Manufacturing overhead $20.00
    Variable selling and admin. Expenses $18.00

    Total: $113

    For 50,000 units:

    $ 5650000

    Total Fixed costs:

    Fixed manufacturing overhead $600,000 ...

    Solution Summary

    Assuming that the volume is 40,000 units compute the mark up percentage and target
    Selling price that will allow bolus computer parts to earn its desired ROI of 25% on this
    New component.

    $2.19