E8-5 Paige Corporation makes a mechanical stuffed alligator that sings the Martian na- tional anthem. The following information is available for Paige Corporation's anticipated annual volume of 500,000 units.
|
Per Unit
|
|
Total
|
|
Direct materials
|
$ 7
|
|
|
|
Direct labor
|
$ 9
|
|
|
|
Variable manufacturing overhead
|
$15
|
|
|
|
Fixed manufacturing overhead
|
|
|
$3,000,000
|
|
Variable selling and administrative expenses
|
$14
|
|
|
|
Fixed selling and administrative expenses
|
|
|
$1,500,000
|
The company has a desired ROI of 25%. It has invested assets of $26,000,000.
Instructions
(a) Compute the total cost per unit.
(b) Compute the desired ROI per unit.
(c) Compute the markup percentage using total cost per unit.
(d) Compute the target selling price.